APA Corporation (NasdaqGS:APA) entered into a definitive agreement to acquire Callon Petroleum Company (NYSE:CPE) for $2.6 billion on January 3, 2024. Under the terms of the agreement, each outstanding share of Callon common stock will be converted into the right to receive, without interest, 1.0425 shares of APA common stock in an all-stock transaction. The purchase price represents an implied value to each Callon share of $38.31 per share based on the closing price of APA common stock on January 3, 2024. The transaction value is $4.5 billion, including $1.9 billion of net debt. APA is expected to issue approximately 70 million shares of common stock in the transaction. After closing, existing APA shareholders are expected to own approximately 81% of the combined company and existing Callon shareholders are expected to own approximately 19% of the combined company. Upon the closing of the transaction, a representative from Callon will join the APA board. APA?s executive management team will lead the combined company with the headquarters remaining in Houston, Texas. Upon termination of the merger agreement under specified circumstances, Callon would be required to pay APA a termination fee of $85 million and APA would be required to pay Callon a termination fee of $170 million.

The transaction is subject to termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval of the transaction by shareholders of both APA and Callon, the effectiveness of the registration statement on Form S-4 to be filed by APA, the APA common stock to be issued pursuant to the merger agreement being authorized for listing on the Nasdaq Stock Market, and other customary closing conditions. The transaction has been unanimously approved by the Boards of Directors of both APA and Callon. The APA and Callon Board resolved to recommend that their respective shareholders approve the merger. The transaction is expected to be accretive to all key financial metrics and add to APA?s inventory of high quality, short-cycle opportunities. The Registration Statement was declared effective on February 15, 2024. As of February 26, 2024, APA Corporation announced that the applicable statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on February 22, 2024. As of February 22, 2024, the transaction is expected to close during the second quarter of 2024. As of February 26, 2024, assuming both APA and Callon shareholder approvals are obtained, the closing of the acquisition is expected to occur on or about April 1, 2024. As of March 27, 2024, transaction has been approved by the shareholders of APA and CPE.

Wells Fargo Securities, LLC and Citigroup Global Markets Inc. acted as financial advisors to APA. Citigroup Global Markets Inc. and Wells Fargo Securities, LLC also provided fairness opinion to APA Board. Sean Wheeler, Debbie Yee, Camille Walker, James Long, Rob Fowler, Mary Kogut, Michael Rigdon, David Wheat and Joe Tobias of Kirkland & Ellis LLP acted as legal advisors to Callon. Morgan Stanley & Co. LLC and RBC Capital Markets, LLC acted as financial advisors to Callon. Morgan Stanley & Co. LLC also provided fairness opinion to Callon Board. Daniel A. Neff and Zachary S. Podolsky of Wachtell, Lipton, Rosen & Katz LLP acted as legal advisors to APA. Georgeson LLC acted as proxy solicitor to APA for a fee of approximately $26,000. Innisfree M&A Incorporated acted as proxy solicitor to Callon for a fee of approximately $50,000. Equiniti Trust Company acted as transfer agent and registrar for APA common stock. APA has agreed to pay Citi for its services in connection with the proposed merger a fee of up to $15 million, of which $2 million became payable upon the delivery of Citi?s fairness opinion and the remainder of which is contingent upon completion of the merger. Callon has agreed to pay Morgan Stanley a fee for its services equal to 0.525% of the transaction value, of which $5 million was payable upon the rendering of Morgan Stanley?s fairness opinion and the remainder of which is contingent upon completion of the merger. APA has agreed to pay Wells Fargo Securities for its services in connection with the proposed merger a fee of up to $15 million, of which $2 million became payable upon the announcement of the merger and the remainder of which is contingent upon completion of the merger. Stuart Rogers of Alston & Bird represented Wells Fargo Securities, LLC as financial advisor to APA Corporation. Equiniti Trust Company acted as transfer agent to Callon.

APA Corporation (NasdaqGS:APA) completed the acquisition of Callon Petroleum Company (NYSE:CPE) on April 1, 2024. Callon stock is no longer listed for trading on the NYSE.