The ConocoPhillips and Marathon Oil Merger Faces FTC Scrutiny

Introduction

ConocoPhillips’ planned $22.5 billion acquisition of Marathon Oil has hit a roadblock as both companies recently received a second request for information from the Federal Trade Commission (FTC). The deal, announced in May, is now under increased scrutiny as regulators delve deeper into the proposed transaction.

FTC Requests More Information

In a regulatory filing, ConocoPhillips disclosed that the FTC had issued a second request for information regarding the acquisition. This additional scrutiny could potentially delay the closing of the deal, which the companies initially expected to finalize in the fourth quarter of 2024.

The request for more information from the FTC effectively extends the timeline for the merger, as both parties must now comply with the inquiry before proceeding. This development has raised concerns about the potential impact on the closing date and the overall completion of the transaction.

Deal Details

Under the terms of the acquisition, Marathon Oil shareholders are set to receive 0.255 shares of ConocoPhillips stock for each share of Marathon they own. This exchange ratio represents a premium of nearly 15% to Marathon’s closing price before the deal was announced.

ConocoPhillips had initially touted the acquisition as being immediately accretive to its earnings and cash flow, with expectations of generating at least $500 million in cost and capital savings within the first full year following the transaction’s closure. However, the latest regulatory hurdles have cast uncertainty over these projections.

Market Reaction

Following news of the FTC’s second request for information, shares of both ConocoPhillips and Marathon Oil experienced modest declines in recent trading. Investors are closely monitoring developments related to the merger and assessing the potential implications of regulatory scrutiny on the companies’ stock performance.

Conclusion

While ConocoPhillips and Marathon Oil remain committed to completing the $22.5 billion acquisition, the recent FTC inquiry has introduced new challenges to the process. The companies are now navigating regulatory hurdles and working towards addressing the additional information requests to move forward with the deal.

Despite the uncertainties surrounding the timeline and closing date, both ConocoPhillips and Marathon Oil are optimistic about the strategic benefits of the merger and remain focused on securing regulatory approval for the transaction.

For more updates on the ConocoPhillips and Marathon Oil merger, stay tuned to Investopedia for the latest news and analysis.

Sources:

• Investopedia – Marathon Oil Stock Jumps on $22.5B Acquisition by ConocoPhillips
• Investopedia – ConocoPhillips and Marathon Oil Merger Draws Fresh FTC Scrutiny