The stock of Exterran Corporation (EXTN) surged in the pre-market after the company announced in a press release that it is merging with Enerflex to form a more prominent company in the energy sector. The stock of EXTN is valued at $4.66, gaining more than 55.33% from its previously closed value. At the end of the last trading session, the stock closed at $3.00. The stock’s traded volume in the previous trading session was around 363.23K shares.
Reasons for the EXTN stock gain
Exterran Corporation (EXTN) and Enerflex Ltd. (TSX: EFX) announced today that they would merge to form a global leader in power infrastructure. Enerflex Ltd. will continue to have its headquarters in Calgary, Alberta. The deal will boost Enerflex’s ability to serve clients in major natural gas, water, and energy transition areas while increasing shareholders’ wealth through profitable growth and cash flow creation.
Enerflex will purchase all of Exterran’s class A common stock in an all-share deal, resulting in about 124 million outstanding Enerflex shares upon closing. It has an estimated combined value of approximately US $1.5 billion. As of January 21, 2022, Exterran’s enterprise value, according to the deal, is about $735 million, reflecting an 18% premium. Exterran’s deal value suggests 3.6x EV/2022E Adjusted EBITDA and 1.9x Price/2022E Cash Flow, plus savings. After the deal closes, Enerflex and Exterran shareholders will possess roughly 72.5 percent and 27.5 percent of the outstanding Enerflex common stock, respectively. Enerflex will keep trading on the TSX and plans to seek a listing on the NYSE or NASDAQ after completing the agreement.
The effect on the stock gain
The stock of Exterran Corporation (EXTN) gained significantly in the pre-market after the company announced the merger. Due to the merger, the company’s stock value increased even more. Investors are responding positively to the merger, as its stock value increased more than 60% from the previous close.
Conclusion
Both companies are leading companies in the energy sector. Their merger will allow them to use their strengths to gain more market share and achieve new growth rates.
