Two Western Canadian oil companies are preparing to combine their businesses.
Surge Energy Inc. (
TSX: T.SGY,
Stock Forum) is offering to buy
Longview Oil Corp. (
TSX: T.LNV,
Stock Forum) in a mostly stock deal that the companies value at $429 million, including assumed debt.
The two Calgary-based oil and gas companies say they have complementary businesses in Western Canada.
They say shareholders of both companies will benefit from higher dividends after the proposed combination, which requires approval from Longview shareholders.
Longview shareholders are being offered 0.975 of a Surge common share. In addition, Surge will assume $150 million of debt owed by Longview,
Surge said in a press release.
Based on the Monday closing price before the agreement was announced, the offer was worth $5.99 per Longview share. Longview shares closed Monday at $5.49.
Longview shareholders will be asked to vote on the offer in June.
Surge shares fell 1% to $6.08 while Longview gained 6.4% to $5.84.