September 9, 2019 - 8:18 AM EDT
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Paulson & Co. Opposes Callon Petroleum's Proposed Acquisition of Carrizo Oil & Gas

- Urges Board and Management to Explore Sale of Company - - Callon's Stock Price Has Fallen by 36%, Resulting in $530 Million in Lost Shareholder Value - - Through Sale, Callon Could be Worth 64% More Than Current Value -

NEW YORK, Sept. 9, 2019 /PRNewswire/ -- Paulson & Co. Inc. ("Paulson"), as manager of funds holding 21.6 million shares, or 9.5% of those outstanding, of Callon Petroleum Company ("Callon" or the "Company") (NYSE: CPE), today sent a letter to the board of Callon.  The letter informs Callon that Paulson plans to vote its shares against the proposed acquisition of Carrizo Oil & Gas Inc. ("Carrizo") (NASDAQ: CRZO) and urges the board and management to pursue a sale of the Company. 

The letter outlines the reasons why Paulson opposes the proposed acquisition:

  • Callon's stock price has fallen by 36% since the transaction was announced.
  • Shareholders have lost $530 million in value.
  • Callon is paying Carrizo a 25% premium, which is unjustifiable given the inferior assets of Carrizo, and results in the transfer of $240 million in value from Callon shareholders to Carrizo shareholders.
  • Callon will lose its premium valuation as a "pure play" Permian producer, resulting in multiple contraction. 
  • Based on the multiples at which pure Permian producers trade, Callon's shares could be worth 64% more than its current value through a sale of the Company.
  • Adding Carrizo's inferior Eagle Ford assets will permanently reduce the attractiveness of Callon to potential acquirers. 

The sharp decline in the Company's stock price since the transaction announcement on July 15, 2019 demonstrates the market's judgement of the value-eroding nature of the proposed acquisition. Holding only 0.5% of the Company's shares outstanding, the board and management have not been meaningfully exposed to the value that has been lost by Callon shareholders.  If the board is truly interested in its shareholders, given the magnitude of the difference between the current stock price of Callon and its takeover value, it should pursue a sale of Callon.

The full letter is attached to this press release.

About Paulson & Co. Inc.
Paulson, founded in 1994, is an investment management firm headquartered in New York.

Contact Details
Marcelo Kim
Paulson & Co. Inc.

Cautionary Statement

Paulson & Co. Inc. ("Paulson") is not soliciting proxies in connection with any matter brought before shareholders of the companies identified in this letter or press release.

Clients, funds and accounts managed by Paulson (the "Paulson Clients") may from time to time beneficially own, and/or have an economic interest in, shares of the companies discussed in this letter and as a result, the Paulson Clients have an economic interest in the forward-looking statements, estimates and projections discussed above and their impact on the companies discussed in this letter. The Paulson Clients are in the business of trading – buying and selling – securities, and may trade in the securities of the companies discussed in this letter. You should also assume that the Paulson Clients may from time to time sell all or a portion of their holdings of one or more of the companies in open market transactions or otherwise (including via short sales), buy additional shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls, swaps or other derivative instruments relating to some or all of such shares, regardless of the views expressed in this letter.

The views contained in this letter and press release represent the opinions of Paulson as of the date hereof. Paulson reserves the right to change any of its opinions expressed herein at any time, but is under no obligation to update the data, information or opinions contained herein. Under no circumstances is this letter or press release intended to be, nor should it be construed as advice or a recommendation to enter into or conclude any transaction or buy or sell any security (whether on the terms shown herein or otherwise). This letter should not be construed as legal, tax, investment, financial or other advice. Additionally, this letter should not be construed as an offer to buy any investment in any fund or account managed by Paulson.

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SOURCE Paulson & Co. Inc.

Source: PR Newswire (September 9, 2019 - 8:18 AM EDT)

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