FTC expands probe of merger by Chesapeake Energy and Southwestern Energy



A filing by Chesapeake Energy with the Securities and Exchange Commission revealed the Federal Trade Commission has apparently expanded its investigation into the proposed merger of the Oklahoma City energy company with Southwestern Energy based in Houston, Texas.

It could mean an anticipated government approval might not occur until the second half of 2024.

The merger was announced on Jan. 10 of this year and the two companies, following rquirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 filied notification and report forms with the Department of Justice and the Federal Trade Commission.

On April, Chesapeake and Southwestern each received a request from the FTC for additional informatoin and documentary materials.

“Issuance of the Second Request extends the waiting period imposed by the HSR Act until 30 days after Chesapeake and Southwestern have substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the FTC,” stated Chesapeake in its SEC filing.

In a similar filing by Southwestern Energy, President William Way made the same explanation to his firm’s shareholders.

“Yesterday, we received a “second request” from the Federal Trade Commission (FTC) for additional information related to its review of the proposed merger transaction,” he said in a mesage.

“This is a common step for recent deals of this size and profile.  We are working diligently to provide the information requested in a timely manner, and now expect the transaction will close in the second half of 2024. Paramount to our culture, we are committed to open and transparent communication throughout this process.  We recognize there are many questions, and we are working to provide accurate information as it becomes available.”

Chesapeake and Southwestern indicated they will continue to work cooperativey with the FTC in its review of the merger. But it also means the merger won’t be completed until the secon d half of 2024, subject to the fulfillment of the other closing conditions. The other conditions incude approvals of shareholders in both firms and meetings for the shareholder votes have yet to be announced.

Under the original merger announcement, it was revealed that the new company would remain headquartered in Oklahoma City where Chesapeake has a large campus. The merger actually involves Southwestern Energy and Chesapeake Energy and Chesapeake wholly owned subsidiaries, Hulk Merger Sub, Inc. and Hulk LLC Sub, LLC. Once the merger is complete, Southwestern will become a wholly owned subsidiary of Chesapeake Energy.