By Arunima Kumar and Ruhi Soni
(Reuters) -Continental Resources Inc said on Monday it had agreed to a higher offer from billionaire-founder Harold Hamm to take the U.S. shale producer private at a valuation of about $27 billion.
Hamm, a legendary oilman who once called the Organization of the Petroleum Exporting Countries a “toothless tiger”, has offered $74.28 per share for the stake not owned by him and the Hamm family trust. He had proposed $70 per share in June.
The company’s shares jumped more than 8% to $74.07 in afternoon trade.
Hamm founded Continental, the largest oil and gas producer in the Bakken shale, as Shelly Dean Oil Company in 1967, and ran it as a private firm until 2007.
In a letter to employees in June detailing his offer, Hamm lamented that the public markets have not supported the oil and gas industry and limited its growth, especially since the pandemic.
Smead Capital Management, the largest shareholder after the Hamm family with around 2% stake, reiterated on Monday that the revised offer “undervalues” Continental.
“While we knew that Hamm would have to raise his price to get a deal done, this still undervalues the assets,” said Cole Smead, president and portfolio manager at Smead Capital.
Continental did not immediately respond to a request for comment on Smead Capital’s remarks.
U.S. crude and natural gas prices have hit their highest levels this year since 2008 as Russia’s invasion of Ukraine further squeezed crude oil supplies, buoying the shale industry.
Still, the buyout is not expected to lead to similar deals, analysts have said, because Hamm’s large stake is not found among other publicly traded producers.
Monday’s all-cash offer represents a premium of 8.9% to Continental’s closing price on Friday and 15% to the close before Hamm’s initial offer was announced.
The offer includes 28 cents per share in lieu of the anticipated dividend for the third quarter, the company said, adding it expected the deal to close before Dec. 31.
The tender offer would be for about 58 million shares valued at around $4.3 billion, Continental said, based on the shares outstanding as of Oct. 12.
Hamm and his family own 83% of Continental’s common stock and the deal does not require a vote by shareholders.
(Reporting by Ruhi Soni and Arunima Kumar in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)