Denbury Resources Inc. (NYSE: DNR) stock has surged 23.78% on December 26^th, 2018 (Source: Google finance) leading to a slight correction of the stock falling over 2.3% on December 27^th, 2018 9as of 9:46 am GMT-5; Source: Google finance). The company has very recently announced the filing of a registration statement on Form S-4 containing a joint proxy statement/prospectus with the Securities and Exchange Commission (“SEC”) in connection with Denbury’s proposed acquisition of Penn Virginia.

The joint proxy statement outlines the strategic rationale and merits of the combination as well as the comprehensive and robust process undertaken by both companies and Boards of Directors in reaching their recommendations for the proposed transaction.

While the registration statement and proxy have not yet become effective and the information contained therein is subject to change, it provides important information about the transaction. Once declared effective by the SEC, a date for a special meeting for Denbury stockholders and Penn Virginia shareholders to approve the proposals associated with the transaction will be set, and the definitive proxy statement/prospectus included in the Form S-4 will be mailed to stockholders prior to the vote.

Meanwhile, under the terms of the definitive merger agreement, shareholders of Penn Virginia will receive, subject to proration, a combination of 12.4 shares of Denbury common stock and $25.86 of cash for each share of Penn Virginia common stock.  Penn Virginia shareholders will have the option to receive all stock, all cash, or a mix of cash and stock, subject to proration such that the overall mix of consideration does not result in more or less than $400 million in cash being paid.  The merger consideration received by Penn Virginia shareholders who do not properly make an election will depend on the number of other shareholders electing to receive all stock, all cash, or a mix of cash and stock.  The stock portion of the consideration received by Penn Virginia’s shareholders is expected to be tax-free.  Upon closing of the transaction, Denbury stockholders will own approximately 71% of the combined company, and Penn Virginia shareholders will own approximately 29%.

The transaction, which is expected to close in the first quarter of 2019, is subject to the approval of Penn Virginia shareholders and is subject to approval by Denbury’s stockholders of the issuance of common stock and an amendment to Denbury’s charter to increase its authorized shares.  The transaction is also conditioned on clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.