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Advancing its shift toward exploration and production, oil and gasoline specialist Amerada Hess Corp. entered into an agreement to acquire Dallas-based Triton Energy Ltd. for $2.7 billion.
Amerada Hess, operator of more than 700 Hess Mart and Hess Express stores, has expressed a desire to grow its upstream business and now acquires a company known for blockbuster oil discoveries but one that was also on the brink of financial ruin just three years ago, Reuters reported.
Amerada Hess will pay $45 cash for each share of Triton, a 50-percent premium to Triton's stock closing price on Monday. It will also assume $500 million in Triton debt. Triton's stock jumped $14.53, or nearly 49 percent, to $44.43 on the New York Stock Exchange. Shares of Amerada Hess fell $2.01 to $77.35.
The move would boost Amerada Hess? output from 425,000 barrels a day of oil equivalent to 535,000 next year. "The acquisition of Triton strengthens our exploration and production business, gives us access to long-life international reserves, substantially increases our production growth and provides significant exploration potential," Chairman and Chief Executive John Hess said in a statement. He expected the deal to close in the third quarter.
"It's a very good deal for Hess," Gene Nowak, an analyst with ABN Amro, told Reuters. "It fits the strategy which John Hess has enunciated for quite a while."
Goldman Sachs advised Amerada Hess on the deal, while J.P. Morgan Chase Securities advised Triton.