Oil and gas producer SandRidge Energy on Dec. 28 backed out from its plan to buy smaller rival Bonanza Creek Energy, giving in to pressure from activist investor Carl Icahn and other shareholders.
Oklahoma-based SandRidge, which emerged from bankruptcy last year, had said in November that it would pay $746 million for Bonanza Creek to expand its presence in the Denver-Julesburg Basin of Colorado.
Icahn, who is the single largest shareholder with a 13.5% stake, had called the offer “value-destroying” and said it provides “no obvious synergies nor economies of scale."
Private investment firm Fir Tree Partners, which owns about 8.3%, had said the purchase would drain all of the oil and gas producer’s cash.
After talking to its top shareholders, SandRidge board on Dec. 28 concluded that it would not receive approval for the transaction.
As part of the mutual termination agreement, Bonanza will receive up to $3.7 million for transaction related expenses, SandRidge said.
Shares of SandRidge were up 1.9%, while Bonanza Creek were down 1.8% in aftermarket trading.
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