The new unsweetened deal terms for the merger between Callon Petroleum Co. and Carrizo Oil & Gas Inc. has won over the transaction’s biggest opponent.

On Nov. 14, Callon lowered the price and premium of its merger with Carrizo, knocking the price of the transaction to $2.7 billion from the original $3.2 billion deal value. As a result, Callon shareholder Paulson & Co. Inc. relented on  Nov. 18 that it would no longer oppose the transaction.

However, Paulson & Co. added that it has reduced its investment position in Callon, though didn’t provide any further details.

“While Paulson believes that a pure Permian focused producer would be a more attractive alternative, Paulson respects that different shareholders might have different viewpoints on this matter,” the firm said in a released statement on Nov. 18.


Callon Petroleum Lowers Its Asking Price For Carrizo Oil & Gas

Paulson & Co. is a New York-based hedge fund founded in 1994 by billionaire investor John Paulson. The firm had a 9.5% stake in Callon as of Nov. 6, according to a report by Reuters.

In a September letter to the Callon board, Paulson & Co. called the original merger agreement’s 25% premium “unjustifiable.” The firm also lamented that the merger would take Callon, previously a pure-play Permian operator, into the Eagle Ford.

“[Carrizo’s] inferior Eagle Ford assets will permanently reduce the attractiveness of Callon to potential acquirers,” Paulson & Co. wrote in the September letter.

In response to the shareholder opposition, Callon and Carrizo agreed to amended merger terms on Nov. 14, which included reducing the equity exchange ratio to 1.75 from 2.05.

The deal’s premium now stands at 6.7%, down from the original 25%. Callon shareholders will now also own 58% of the combined company, up from the original 54%.

Shareholders will still need to approve the merger at a special meeting rescheduled for Dec. 13. Paulson & Co. on Nov. 18 said it will vote its shares in favor of the transaction.

Callon and Carrizo still expect to close the transaction by year-end, according to a joint release from Nov. 14.