Skip to main content

Peyto chairman Don Gray says Open Range Energy is ‘the perfect fit for our company.’

Larry MacDougall

Peyto Exploration and Development Corp. has raised its all-stock takeover offer for Open Range Energy Corp. to fend off a rival bid.

When Calgary-based Peyto announced its initial offer in early July, it was worth about $1.34 per share.

On Tuesday, Peyto announced it plans to swap 0.0723 of one of its shares for each Open Range one, up from an earlier exchange ratio of 0.0696.

Story continues below advertisement

Based on Peyto's current share price of $21.29 around mid-day Tuesday, that makes the offer for Open Range worth about $1.54 per share.

The new deal is worth $115-million, plus the assumption of $69.5-million in Open Range debt and $10-million in transaction costs announced earlier.

Open Range shares rose more than 6 per cent to $1.54 on the TSX.

"The increase in the consideration resulted from Open Range having received an unsolicited proposal from a third party," Peyto said in a statement.

Open Range must now also pay a fee of $8.5-million to Peyto if the deal doesn't close, up from the earlier non-completion fee of $5-million.

"The team at Open Range has built a very impressive asset over the years. In our 13-year corporate history we have not come across another company that has fit so well with our build-it-yourself model," said Peyto chairman Don Gray.

Mr. Gray said Open Range is Peyto's immediate neighbour in the Sundance area of Alberta's natural gas-rich Deep Basin area.

Story continues below advertisement

"We are very confident that our expertise in this area and the obvious geographical synergies between our assets make the combination of Peyto and Open Range the perfect fit."

Report an error

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨