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Forest Oil taps Forcenergy
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July 10, 2000: 4:52 p.m. ET
Deal, valued at $615 million, unites Anschutz holdings, creates top oil firm
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NEW YORK (CNNfn) - Forest Oil Corp. tapped Forcenergy Inc. Monday for an acquisition valued at $615.4 million in stock, a deal that will strengthen the company's foothold in the Gulf of Mexico and create one of the 10 largest independent exploration and production firms in the United States.
If approved, the deal will instantly create a company with proved reserves exceeding 1.4 billion cubic feet of gas equivalent and a market capitalization of more than $1.5 billion.
It also unites the two major holdings of Denver billionaire Philip Anschutz, whose Anschutz Corp. owns 37 percent of Forest Oil and 36 percent of Forcenergy.
Company officials said approximately 67 percent of Forcenergy's shareholders and 37 percent of Forest Oil's shareholders already have agreed to vote in favor of the merger. After the deal closes, Forest Oil stockholders will hold a roughly 56 percent stake in the new company while Forcenergy will hold 44 percent.
 Terms of the transaction call for Forest Oil (FST: Research, Estimates) to exchange 1.6 shares of its stock for each Forcenergy (FORC: Research, Estimates) share. Based on Forest Oil's closing price of $16 per share Friday, that represents a 21 percent premium on Forcenergy's Friday closing price of 21-3/16.
The transaction will more than triple the Denver-based Forest Oil's proved reserves in the Gulf Coast waters, where the company typically has generated its highest rates of return, and give the company access to Alaska's valuable Cook Inlet.
The merger is expected to immediately improve Forest Oil's cash flow, which closed at $33 million during the first quarter, on a per share basis.
The Denver-based Forcenergy's revenue has slipped each of the last two years, but the company did reverse a massive loss from 1998 last year as Anschutz helped steer the company out of bankruptcy.
Salomon Smith Barney served as financial advisor for Forest Oil in the negotiations while Petrie Parkman & Co. and Lehman Brothers represented Forcenergy.
Forest Oil shares slipped 1-7/8 to 14-1/8 in late afternoon trading Monday while Forcenergy gained 15/16 to 22-1/8. Forcenergy's stock is almost more than 50 percent above its 52-week low of 14-1/2, hit just two months ago. 
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