Why EQT & Equitrans Midstream Shares Are Moving Premarket Monday

Zinger Key Points
  • EQT and Equitrans Midstream Corporation announce merger, creating a $35 billion enterprise value.
  • Merger expected to generate $250 million annual synergies, with potential for $175 million more from optimization and expansion.

Shares of EQT Corporation EQT And Equitrans Midstream Corporation ETRN are moving in opposite directions premarket today after the companies penned a merger agreement.

Under the terms of the agreement, EQT will acquire Equitrans in an all-stock transaction, which will create a combined company with an enterprise value of over $35 billion. The merger deal has been unanimously approved by the Boards of both companies.

As per the terms, each Equitrans share will be exchanged for 0.3504 shares of EQT, representing an implied value of $12.50 per Equitrans share based on the volume-weighted average price of EQT common stock for the 30 days ending on March 8, 2024. 

Also Read: Equitrans Midstream In Strategic Transaction Talks – What’s On The Cards?

EQT’s existing shareholders are projected to own approximately 74% of the combined company, while Equitrans’ shareholders will own about 26%. 

The transaction is expected to close in the fourth quarter of 2024, subject to required regulatory approvals and clearances, and other customary closing conditions.

The combined company will have 27.6 Tcfe of proved reserves across ~1.9 million net acres with 6.3 Bcfe/d of net production and over 8.0 Bcfe/d of gathering throughput across more than 3,000 miles of pipeline.

Synergies: The combined company is projected to be significantly accretive to free cash flow (FCF) per share, with expected pro forma 2025 to 2029 cumulative FCF generation of around $16 billion at recent strip prices.

The symbiotic nature of the assets is anticipated to drive $250 million of annual synergies.

The company has also identified an upside pathway to additional per annum synergies of $175 million from system pressure optimization, integration of water networks, and execution of expansion projects.

The deal also offers pathway to reduce EQT’s long-term corporate FCF breakeven to less than $2 per MMBtu.

Price Action: EQT shares are down 4.32% at $35.90, while ETRN shares are up 8.16% at $12.06 premarket on the last check Monday.

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