Shell (SHEL) Boosts ARC Resources Stock (ARX) with a $13.6B Deal

Shell (SHEL) stock was a hot topic on Monday after the London-based energy and petrochemical company announced a deal to acquire Canadian energy company ARC Resources (TSE:ARX). ARC Resources’ operations are largely focused on the Montney shale basin in British Columbia and Alberta, Canada.

Under the terms of the agreement, shareholders of ARX stock will receive CAD 8.20 in cash and 0.40247 shares of Shell stock for each share they own. This represents a mixed offer of 25% cash and 75% shares for ARC Resources stock. The offer translates to CAD 32.80 per share for ARX stock, which is a 20% premium to the stock’s 30-day volume-weighted average price. This also sets the total equity value of the deal at US$13.6 billion.

Wael Sawan, CEO of Shell, said, “ARC is a high-quality, low-cost and top quartile low carbon intensity producer operating in the Montney shale basin that complements our existing footprint in Canada and strengthens our resource base for decades to come. We are accessing uniquely positioned assets and welcoming colleagues that bring deep expertise which, combined with Shell’s strong basin level performance, provides a compelling proposition for shareholders. This establishes Canada as a heartland for Shell while furthering our strategy to deliver more value with less emissions.”

Shell and ARX Stock Movements Today

Shell stock was down 0.83% on Monday but was still up 21.42% year-to-date. The stock has also rallied 35% over the past 12 months.

ARC Resources stock was up 21.81% this morning, extending a 23.09% year-to-date rally. However, the stock was down 3.88% over the past 12 months.

Is Shell Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for Shell is Moderate Buy, based on five Buy and five Hold ratings over the past three months. With that comes an average SHEL stock price target of $101.71, representing a potential 15.7% upside for the shares.