Harold Hamm Makes Buyout Offer For Oil Giant Continental Resources

Harold Hamm

Harold Hamm, the founder and board Chairman of Continental Resources (NYSE: CLR), an Oklahoma-based oil and gas production giant, is seeking to take private the company he started over five decades ago. He has offered to acquire the remaining shares of the firm that he doesn’t already own in a deal valuing it at $25.4bn.

  • Hamm owns a majority (83%) stake in Continental and has placed a formal bid to buy the remaining 17% for $70 per share, a 9% premium to the oil giant’s share price preceding the offer. At the proposed price, Hamm will pay roughly $4.3bn for the company’s remaining shares.

 

  • In an official statement, Continental said its board “intends to establish a special committee consisting of independent directors of the Board to consider the proposal,” and that the acquisition proposal wasn’t binding.

 

  • Hamm is a member of Continental’s board, but serves as its Chairman and has extensive financial ties to the company. Hence, he doesn’t constitute an independent director that’ll be part of the proposed committee to evaluate the offer.

Continental Resources is one of the leading oil and gas exploration and production firms in the US. In 2021, it reported a record net income of $1.7bn on $5.7bn in revenue. This year, the company has fared even better, thanks to rising oil prices globally. In its last fiscal quarter (ended March 31, 2022), it pulled in a net income of $598mn, up 130% year-over-year, and sold $2.3bn worth of oil and gas products, up 82% year-over-year.

  • Hamm founded Continental in 1967 at the age of 21 as the Shelly Dean Oil Company. In 1990, he renamed it Continental Resources and took the company public in 2007. Since that time, he has pocked hundreds of millions in dividends and taken advantage of oil boom-bust cycles to buy Continental shares at low points and increase his stake.

 

  • As of 2014, Hamm controlled about 70% of Continental Resources directly and through family trusts. That number has grown to 83%, thanks to his periodical acquisition of shares in the company. Now, he has decided to take the company back into private hands.

It’s unclear if Continental’s specially-appointed committee will accept Hamm’s offer, especially at a time when oil and gas producers are enjoying record profits, leaving a lot of room for Continental’s stock to grow. But, Hamm holds a lot of sway over the company, even though he won’t directly participate in the evaluation of his offer.

In a press statement, the Hamm family said they intend to continue as long-term shareholders if the committee doesn’t accept the transaction.

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