Continental Resources Stock Surges After Founder's Offer to Go Private | CLR Message Board Posts


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Msg  191 of 191  at  6/14/2022 5:53:07 PM  by

jerrykrause


Continental Resources Stock Surges After Founder's Offer to Go Private

 

Continental Resources Stock Surges After Founder's Offer to Go Private

 

Continental Resources stock soared after founder and billionaire Harold G. Hamm offered to take the fracking company private at $70 a share in cash or $4.4 billion.

Continental (ticker: CLR) stock was up almost 15% to $73.64 on Tuesday.

The Hamm family "collectively holds approximately 83%" of Continental's common shares, according to Continental . The offer represents an approximate 9% premium over the Monday closing price of the firm's shares.

Continental will establish a special committee of independent directors to consider the proposal.

Analysts definitely don't see Hamm facing any issues funding this deal. Continental has over $6 billion of debt and analysts estimate approximately $6 billion of free cash flow by 2023.

"CLR can effectively fund the equity component of the deal with internally generated FCF over the next year," said Gabriele Sorbara, analyst at Siebert Williams Shank.

Hamm is willing to pay the price to take Continental private because he thinks there is a lack of support from the public market, which under-appreciates Continental, and that a private model will allow the company more flexibility with oil and natural gas exploration, according to a letter he sent to employees.

But in case Continental's special committee doesn't recommend the transaction, the Hamm Family intends to continue as long-term shareholders, the press release said. The family isn't interested in selling their stock or pursuing other strategic options involving Continental.

What would most likely happen from here is a negotiation for a higher price or potential outside bids, analysts said.

The offer isn't binding and the board's decision to evaluate it before moving forward is an intentional strategy to open the doors to competing bids from large-cap public peers, said Neal Dingmann, analyst at Truist.

Sorbara thinks there is room for negotiation. Her $80 price target on the company represents a 14.3% upside to the proposed take offer.

Dingmann thinks the company is worth at least his $95/share price target.

Smead Capital, the second-largest CLR stock owner with 7.4 million shares, or roughly 1.99% of the company, is on the same page.

The open market is seriously undervaluing oil stocks. Continental is worth north of $100, Smead Capital's executives, Bill Smead and Cole Smead said in an email to Barron's.

 


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