Magnolia Oil & Gas (MGY) said Monday that it has signed a definitive agreement to acquire WildFire Energy for about $4.06 billion, including debt and subject to customary purchase price adjustments.
Under the terms of the deal, WildFire shareholders will receive 32.2 million Magnolia shares, and Magnolia will also assume WildFire's $600 million of outstanding notes due 2029, according to a statement.
Magnolia said it intends to fund the remaining amount through existing cash, debt, and new equity. The company said it has also secured committed financing from JPMorgan Chase (JPM), Citigroup (C) Global Markets, and Wells Fargo (WFC).
The company added that it has amended its secured credit facility to a $2 billion borrowing base, with elected commitments of $1.75 billion subject to the transaction's completion.
Magnolia said it expects the acquisition to be immediately and highly accretive to its cash flow and earnings per share, and to generate over $100 million in annual synergies and cost savings.
Magnolia said the acquisition, expected to close in late Q3, has received unanimous approval from its board.
Magnolia shares were up 1.5% in Monday's premarket activity.