Appalachian Basin-focused natural gas producer CNX Resources Corp. agreed to acquire all of its midstream subsidiary CNX Midstream Partners LP's common units it does not already own in exchange for about $357 million worth of CNX Resources' common shares.
Under the merger agreement, each CNX Midstream unit will be converted to 0.88 CNX Resources shares, representing a 15% premium to the average exchange ratio during 30 trading days ended July 24, according to a July 27 news release. CNX Resources expects to issue about 37 million shares, or about 17% of the total shares outstanding of the combined entity.
"Following the completion of the transaction, CNX is expected to be the lowest cost producer in the Appalachian Basin, with increased operational flexibility and basin leading operational metrics," CNX Resources CFO Don Rush said.
The transaction is expected to close in the fourth quarter, after which CNX Midstream's units will cease to be publicly traded. CNX Midstream's senior notes will also remain outstanding and no additional payments will be made to CNX Resources in connection with the elimination of the incentive distribution rights from January.
Deal closing is subject to majority approval by CNX Midstream unit holders, among other closing conditions.
Citi is acting as exclusive financial adviser and Latham & Watkins LLP is serving as legal adviser to CNX Resources. Intrepid Partners LLC is acting as exclusive financial adviser and Baker Botts LLP is serving as legal adviser to the conflicts committee of CNX Midstream's board.