A #merger could take shape in the US energy sector. According to people familiar with the matter, Devon Energy Corp is looking to acquire one of its rivals, WPX Energy Inc.
Allegedly, the two companies are considering an all-stock deal, which, if it goes through, could create a company with a market value of $6 billion. Despite this being an opportunity to bring together two medium companies, experts believe it is a result of the #pandemic on top of the difficulties that #shale companies already have encountered over the years, most of them being from investors delivering consistent profits and cash flow.
Both Devon and WPX have dropped significantly in value in the past year – 64% and 57%, respectively. Also, the companies’ market cap dove in the past years. Devon reached its peak in 2008 when it was worth over $50 billion, while now its market cap sits at $3.4 billion. At the same time, WPX is now worth around $2.5 billion from its peak of $8 billion two years ago.
If everything goes according to plan, the deal could be officially announced later this week. Devon closed the week 1.56% lower, but during today's pre-market session, it gained 0.91%.
The news seems to be like a breath of fresh air for WPX, as today it surged more than 22%.
Sources: investing.com, marketwatch.com, finance.yahoo.com