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Continental to be acquired by Hamm

family in sweetened $4.3bn deal

US SHALE producer Continental Resources will
merge with Omega Acquisition, an Oklahoma
corporation owned by Continental’s founder,
Harold Hamm.
The company, one of the US’ largest inde-
pendent oil companies, will become private. The
deal is valued at $4.3bn.
Oklahoma-based Continental is the most
sizeable oil and gas producer, and pioneered
hydraulic fracturing in the Bakken shale basin
of North Dakota. It also operates in Oklahoma’s
Anadarko Basin. Founded in 1967, it was private
until 2007.
The deal, which does not require a share-
holder vote because of the size of the Hamm
family’s stake, is considered the most significant
in the US shale sector since oil and gas prices rose
after being roiled by Russia’s invasion of Ukraine
and a surging economy following the pandemic.
Omega will offer to purchase all the out-
standing shares of Continental’s common stock
at $74.28 per share that are not already owned by
the Hamm family or rollover shares. Based on
the shares outstanding as of October 12, 2022,
the tender offer would be for some 58mn shares
of common stock.
BP to buy biogas producer Archaea for $4.1bn tinental’s anticipated dividend for the third quar-
The offer price includes $0.28 in lieu of Con-
ter of 2022.
Continental will not pay dividends between
the signing and closing of the transaction.
The offer price is a sweetened deal and rep-
resents a 15% premium to the closing price of
the common stock of $64.50 as of 13 June, 2022,
before the 14 June, 2022 announcement of the
Smead Capital Hamm family’s initial offer to Continental. is under-valued. Hamm should pay approxi- Harold Hamm is
Hamm had offered $70 per share in June.
mately $90 to buy the shares he does not already
Continental’s founder.
Management, Hamm said in June that public markets have own, Cole Smead, president and portfolio man-
Continental’s not adequately supported America’s oil and ager for the investor, told Bloomberg.
gas industry. And indeed investors have been
“While we knew that Hamm would have to
largest minority demanding better returns, even though US oil raise his price to get a deal done, this still under-
companies have decreased capital investment values the assets,” Smead said in a statement.
He also told Bloomberg that rival Devon
investor at 2%, since the start of the pandemic and as the energy Energy Corp. should make an all-stock offer for
transition to renewables speeds up.
said that the deal The transaction will be financed using a com- Continental.
is under-valued. bination of cash on hand, borrowings under the Smead recalled that in June Continental’s
company’s existing revolving credit facility and a board of directors said they would create a spe-
new term loan facility to be entered into in con- cial committee to consider Hamm’s initial offer
nection with the closing of the transaction. and that Smead would be able to engage with the
Billionaire founder Hamm currently serves as committee, Bloomberg reported. This did not
chairman of Continental’s board of directors. He occur.
and the rest of the Hamm family collectively own “It looks like the special committee wasn’t
around 83% of Continental’s common stock. interested in necessarily the value of the busi-
The oil explorer’s board of directors has ness,” Smead told Bloomberg. “They were inter-
approved the merger. The transaction is expected ested in ‘what could we do that might please the
to close before the end of the year. process for Harold’ because the things that were
Smead Capital Management, Continental’s communicated to us never took place.”
largest minority investor at 2%, said that the deal Smead says it may take legal action.™

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