SandRidge Energy and Denver-based Bonanza Creek Energy called off their engagement Thursday after failing to win over investors on the merits of their union.
A sizable block of SandRidge Energy shareholders, led by activist investor Carl Icahn, protested the combination as an illicit affair that would deplete the company of its cash and end in misery for all involved.
Knowing they would lose a shareholder vote, directors at both SandRidge and Bonanza Creek mutually agreed to call the whole thing off, the companies said in a statement.
As part of the break up, SandRidge will reimburse Bonanza Creek up to $3.7 million for transaction-related expenses.
“While we are disappointed with this result, we are very pleased with the progress that Bonanza Creek has made this year and will continue to focus on developing Bonanza Creek’s assets and maximizing value for our shareholders,” the company’s chairman, Jack Vaughn, said in a statement.
Oklahoma-based SandRidge, which emerged from bankruptcy protection last year, in mid-November offered to pay $746 million to purchase Bonanza Creek, which emerged from its own restructuring in April.
The offer represented a premium of 17.5 percent to Bonanza Creek’s share price at the time, a premium Icahn called excessive.
Icahn, the single largest shareholder in SandRidge with a 13.5 percent stake, also called the offer “value-destroying” that had “no obvious synergies nor economies of scale.”
Protests intensified after SandRidge threatened to take out a poison pill to prevent opponents from blocking the deal, which would have provided the company with 67,000 acres in the Denver-Julesburg Basin in Colorado.
Fir Tree Partners Inc., the third largest shareholder in SandRidge with a 7 percent stake, sided with Icahn this month, swinging the momentum in favor of opponents.
“We believe SandRidge would better position itself by returning capital to its shareholders and growing production in a disciplined manner, not through pursuing this reckless transaction,” Fir Tree wrote in a letter.
Bill Barrett Corp., another Denver oil and gas producer, pursued Bonanza Creek in January, but that deal also fell apart.
