4 big deal reports: Chevron scoops up PDC Energy for $6.3B

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Here is your Pro Recap of the 4 head-turning deal dispatches you may have missed this week: Chevron to acquire PDC Energy, RenaissanceRe to buy AIG’s treaty reinsurance business, Wyndham Hotels & Resorts seeking to buy Choice Hotels, and Greenhill to be acquired by Mizuho.

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Chevron (NYSE:CVX) announced last Monday that it will acquire all of the outstanding shares of PDC Energy (NASDAQ:PDCE) in an all-stock transaction valued at $6.3 billion (or $72 per share).

According to the agreement, PDC shareholders will receive 0.4638 shares of Chevron for every PDC share, based on Chevron’s closing price on May 19, 2023. The total enterprise value of the transaction including debt is $7.6B.

Following the announcement, Chevron received two upgrades. HSBC upgraded the company to Buy from Hold while cutting its price target to $189.00 (from $193.00). CFRA upgraded the company to Buy from Hold with a price target of $172.00.

Meanwhile, Mizuho Securities downgraded PDC Energy to Neutral from Buy and cut its price target to a merger purchase price of $72.00 (from $93.00).

PDC Energy shares gained around 8% for the week.

RenaissanceRe (NYSE:RNR) said last Monday that it agreed to buy AIG’s (NYSE:AIG) treaty reinsurance business, which includes Validus Reinsurance Ltd and its consolidated subsidiaries, AlphaCat Managers Ltd and its managed funds, as well as all renewal rights to the Assumed Reinsurance Treaty Unit of Talbot.

AIG will deliver $2.1 billion in unlevered shareholder’s equity to RenaissanceRe at closing, with any excess retained by AIG. The total consideration is approximately $2.985B, consisting of $2.735B in cash and $250 million in RenaissanceRe common shares. The transaction is expected to close in Q4/23.

After the deal is finalized, AIG will retain 95% of the development on net reserves and has plans to make significant investments in RenaissanceRe’s Capital Partners business.

Following the announcement, Jefferies upgraded RenaissanceRe Holdings to Buy from Neutral and raised its price target to $238.00 from $234.00.

Wyndham Hotels & Resorts (NYSE:WH) shares jumped more than 5% on Tuesday after the Wall Street Journal reported that Choice Hotels (NYSE:CHH) is seeking to buy the company. If the deal goes through, it will result in the formation of one of the largest budget hotels in the US.

Currently, there are no active discussions between the companies, and it remains uncertain whether Wyndham is interested in pursuing a deal. In case Wyndham is not interested, Choice Hotels might directly approach Wyndham shareholders.

Choice Hotels shares closed the week with more than a 3% loss.

Greenhill (NYSE:GHL) shares jumped more than 116% last Monday after Mizuho Financial (NYSE:MFG) announced it will acquire the company in an all-cash transaction at $15 per share.

The acquisition deal, which reflects an enterprise value of around $550M, including assumed debt, serves as a means for Mizuho to expedite its growth strategy in investment banking.

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