Calpine Corporation Acquires Sheridan Energy Inc. in $121 Million Deal

Strategic Insights -

Calpine Corporation has reached an agreement to acquire Houston-based Sheridan Energy Inc. in a $121 million deal, marking a strategic move to secure low-cost natural gas supplies for its growing fleet of power plants. The offer, valued at $121 million, includes the assumption of $80 million in Sheridan debt and will see Calpine purchase all outstanding shares of Sheridan's common stock for $5.50 per share - a 75 percent premium over the company's 12-month average trading price. The deal is expected to be completed in September 1999, with the acquired assets providing Calpine with access to 148 billion cubic feet equivalent of proven reserves, of which 90 percent are natural gas.

Key Takeaways:

  • Calpine Corporation will acquire Houston-based Sheridan Energy Inc. through a $41 million cash tender offer, with the deal valued at a total of $121 million, including the assumption of $80 million in Sheridan debt.
  • The acquisition will see Calpine purchase all outstanding shares of Sheridan's common stock for $5.50 per share, a 75 percent premium over the company's 12-month average trading price.
  • The deal is expected to be completed in September 1999, providing Calpine with access to 148 billion cubic feet equivalent of proven reserves, of which 90 percent are natural gas.
  • The acquired assets are located in markets where Calpine is developing low-cost natural gas supplies and proprietary pipeline systems in support of its power plants.
  • Calpine has approximately 8,500 megawatts of capacity in operation, under construction or in announced development in 12 states.
  • PaineWebber estimates that the deal will add 10 cents a share to Calpine's earnings, beginning in 2000.

Statistics:

  • $121 million: Total value of the deal
  • $80 million: Shelby debt assumed by Calpine
  • $5.50 per share: Price Calpine will pay for each share of Sheridan common stock
  • 75 percent: Premium over the company's 12-month average trading price
  • 148 billion cubic feet: Equivalent proven reserves acquired by Calpine
  • 90 percent: Natural gas reserves acquired by Calpine
  • 8,500 megawatts: Capacity of Calpine's power plants in operation, under construction, or in announced development
  • 12: States where Calpine has power plants

Sources:

  • "Calpine in Talks to Buy Sheridan Energy" - Dow Jones
  • "Calpine to Purchase Sheridan Energy for $121 Million" - The Houston Chronicle