Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Crosstex Energy (NASDAQ: XTXI ) jumped a whopping 60% and Crosstex Energy LP (NASDAQ: XTEX ) jumped 33% today after the companies announced a merger with Devon Energy's (NYSE: DVN ) assets.
So what: Devon Energy will combine its U.S. pipelines, processing, and related assets with Crosstex Energy to form a new business Devon is contributing assets said to be worth $4.8 billion and $100 million in cash to the new businesses, which will consist of a general partner and an MLP. Crosstex Energy will get one unit of the new general partner and $2.00 per share for their shares.
Now what: At the end of the day, Crosstex Energy shareholders will own 30% of the new general partner with Devon Energy will own 70%. Crosstex Energy, L.P. unitholders will own 40% of the MLP, which will hold half of the assets Devon is contributing. When it's done, I think this will help unlock value for both companies, although I'd like to see complete operations before calling this a steal at today's stock price.
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