Item 1.01. |
Entry Into a Material Definitive Agreement. |
On January 3, 2024, APA Corporation, a Delaware corporation (APA), entered into an Agreement and Plan of Merger (the Merger
Agreement) with Callon Petroleum Company (Callon) and Astro Comet Merger Sub Corp., a wholly owned subsidiary of APA (Merger Sub).
The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (1) Merger Sub will be merged
with and into Callon (the Merger), with Callon surviving and continuing as the surviving corporation in the Merger, and, (2) at the effective time of the Merger (the Effective Time), each outstanding share
of common stock of Callon (other than Excluded Shares (as defined in the Merger Agreement)) will be converted into the right to receive, without interest, 1.0425 shares of common stock of APA, with cash in lieu of fractional shares.
The board of directors of APA has unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the issuance
of the shares of common stock of APA (the APA Stock Issuance), are in the best interests of, and advisable to, APA and APA shareholders, (2) approved and declared advisable the Merger Agreement and the transactions
contemplated thereby, including the APA Stock Issuance, (3) resolved to recommend that the APA shareholders approve the APA Stock Issuance, and (4) approved the execution, delivery, and performance by APA of the Merger Agreement and the
consummation of the transactions contemplated thereby.
The completion of the Merger is subject to satisfaction or waiver of certain customary mutual
closing conditions, including (1) the receipt of the required approvals from APA shareholders and Callon shareholders, (2) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the HSR Act), (3) the absence of any governmental order or law prohibiting consummation of the Merger, (4) the effectiveness of the registration statement on Form S-4
to be filed by APA, pursuant to which the shares of APA common stock to be issued in connection with the Merger will be registered with the U.S. Securities and Exchange Commission (the SEC), and (5) the APA common stock to be
issued pursuant to the Merger Agreement being authorized for listing on the Nasdaq Stock Market. The obligation of each party to consummate the Merger is also conditioned upon the other partys representations and warranties being true and
correct (subject to certain materiality exceptions), the other party having performed in all material respects its obligations under the Merger Agreement, and the non-occurrence of any material adverse effect
with respect to the other party since the date of the Merger Agreement.
The Merger Agreement contains customary representations and warranties of APA and
Callon relating to their respective businesses, financial statements, and public filings, in each case generally subject to customary materiality qualifiers. Additionally, the Merger Agreement provides for customary
pre-closing covenants of APA and Callon, including covenants relating to conducting their business in all material respects in the ordinary course consistent with past practice and refraining from taking
certain specified actions without the other partys consent, in each case, subject to specified exceptions.
APA and Callon have agreed to use their
reasonable best efforts to obtain the expiration or termination of the waiting period under the HSR Act as promptly as practicable and any other governmental approval required in connection with the Merger. APA and Callon have also agreed to use
their reasonable best efforts to avoid or eliminate any impediments under antitrust laws so as to enable the closing to occur as soon as reasonably practicable, subject to certain limitations set forth in the Merger Agreement.
The Merger Agreement provides that, during the period from the date of the Merger Agreement until the Effective Time, each of APA and Callon will be subject
to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide non-public information to third parties, and to engage in discussions with third parties
regarding alternative acquisition proposals, subject to customary exceptions. Subject to certain exceptions, APA is required to call a meeting of its shareholders to approve the APA Stock Issuance and to recommend that its stockholders approve the
APA Stock Issuance. Subject to certain exceptions, Callon is required to call a meeting of its shareholders to approve the Merger Agreement and to recommend that its shareholders approve the Merger Agreement.