Chesapeake Energy Corp. (NYSE:CHK): Possible merger target?

Relative size and current market value make CHK-US a possible merger target within this peer group.

With a book value of USD12,265 million, CHK-US could be acquired by others within this peer group. It may also be a possible target now because its share price is reasonably off its 52-week high and not so high in relation to book (P/B is lower than peers) that it would deter an acquirer.

CHK-US’s relative valuation (P/B) is not high enough to suggest acquisitions in this peer group.

CHK-US could achieve growth through acquisitions as it is big enough (by book value) and has room for more goodwill on its balance sheet. Acquisitions in this peer group would be more likely if its relative valuation (P/B) was higher.
Likely M&A Action or Growth Strategy based on P/B vs. Net Tangible Assets/Equity (%) charted with respect to Peers for Chesapeake Energy Corp. (NYSE:CHK)

Dividend Action

Dividend cut, increase or initiate?

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Share Buyback

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Company Profile

Chesapeake Energy Corp. explores, develops and produces oil and natural gas properties. Its principal activities include discovering and developing unconventional natural gas and oil fields onshore in the U.S. The company has also vertically integrated its operations and owns substantial marketing, midstream and oilfield services businesses directly and indirectly through its subsidiaries Chesapeake Energy Marketing, Inc., Chesapeake Midstream Development LP, Chesapeake Oilfield Services LLC, and Chesapeake Midstream Partners LP. Chesapeake Energy operates its business though the following segments: Exploration and Production; Natural Gas and Oil Marketing; Gathering and Compression; and Oilfield Services. The Exploration and Production segment is responsible for finding and producing natural gas and oil. The Marketing, Gathering and Compression segment is responsible for marketing, gathering and compression of natural gas and oil primarily from Chesapeake-operated wells. The Oilfield Services segment is responsible for contract drilling, oilfield trucking, oilfield rental, pressure pumping and other oilfield services operations for both Chesapeake-operated wells and wells operated by third parties. The company was founded by Aubrey K. McClendon and Tom L. Ward on May 18, 1989 and is headquartered in Oklahoma City, OK.

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This article was originally written by abha.dawesar, and posted on CapitalCube.