Ticonderoga Reiterates a 'Buy' on Chesapeake Energy (CHK); Acquiring Bronco Drilling (BRNC) for $315MM: Staying Ahead of the Game
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Price: $20.80 -2.12%
Rating Summary:
9 Buy, 20 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
Rating Summary:
9 Buy, 20 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
Trade CHK Now!
Ticonderoga reiterates a 'Buy' on Chesapeake Energy (NYSE: CHK), PT $40.
Ticonderoga analyst says, "Chesapeake announced it has offered to acquire all outstanding shares of Bronco Drilling Co. (Nasdaq; BRNC)(NotRated) for $315MM, including debt, working capital, and outstanding warrants. Shareholders of BRNC will receive a cash payment of $11.00/share, which represents a 6% premium to yesterday’s closing price (24% premium to 90-day average)...The transaction has been unanimously approved by both company’s boards of directors. Also, BRNC’s two largest shareholders, who account for 32% of all outstanding common stock, have already committed their shares to CHK’s offer."
"While there could be a negative pullback to CHK announcing an acquisition in the midst of its debt reduction initiative, we believe the added flexibility and additional rig security more than offsets any financial impact, which is minimal, at most...CHK is currently our most undervalued name under coverage, trading at only 55% of NAV compared with a group median of 80%. However, there are only a handful of companies that can match the quality of CHK’s asset base, and in our view, even fewer of equal size that can achieve the same level of growth."
For more ratings news on Chesapeake Energy click here and for the rating history of Chesapeake Energy click here.
Shares of Chesapeake Energy closed at $32.65 yesterday, with a 52 week range of $19.62-$35.95.
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Ticonderoga analyst says, "Chesapeake announced it has offered to acquire all outstanding shares of Bronco Drilling Co. (Nasdaq; BRNC)(NotRated) for $315MM, including debt, working capital, and outstanding warrants. Shareholders of BRNC will receive a cash payment of $11.00/share, which represents a 6% premium to yesterday’s closing price (24% premium to 90-day average)...The transaction has been unanimously approved by both company’s boards of directors. Also, BRNC’s two largest shareholders, who account for 32% of all outstanding common stock, have already committed their shares to CHK’s offer."
"While there could be a negative pullback to CHK announcing an acquisition in the midst of its debt reduction initiative, we believe the added flexibility and additional rig security more than offsets any financial impact, which is minimal, at most...CHK is currently our most undervalued name under coverage, trading at only 55% of NAV compared with a group median of 80%. However, there are only a handful of companies that can match the quality of CHK’s asset base, and in our view, even fewer of equal size that can achieve the same level of growth."
For more ratings news on Chesapeake Energy click here and for the rating history of Chesapeake Energy click here.
Shares of Chesapeake Energy closed at $32.65 yesterday, with a 52 week range of $19.62-$35.95.
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