Today’s news: Trending business stories for February 12, 2024

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Diamondback to buy Endeavor for $26 billion in oil megadeal

Diamondback Energy Inc. reached an agreement to buy fellow Texas oil-and-gas producer Endeavor Energy through a US$26-billion deal that will create the largest pure-play operator in the prolific Permian Basin.

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Diamondback will fund the deal through 117.3 million shares and US$8 billion in cash, the two Midland, Texas-based companies said in a statement Feb. 12. Diamondback shareholders will own 60.5 per cent of the company after the deal closes, and Endeavor shareholders will own 39.5 per cent.

The agreement is the latest in a string of massive deals transforming the U.S. energy landscape as companies push to line up future drilling sites and cut costs. Over the past four months, Exxon Mobil Corp. struck a deal to buy Pioneer Resources for about US$60 billion, Chevron Corp. agreed to buy Hess Corp. for about US$53 billion and Occidental Petroleum Corp. agreed to buy CrownRock LP for about US$10.8 billion.

“This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company,” Diamondback chief executive Travis Stice said in the statement. “With this combination, Diamondback not only gets bigger, it gets better.”

Diamondback shares were unchanged before the start of regular trading in New York.

The consolidation marks a maturing of the long-fragmented shale industry, which has traditionally had few players of significant size and struggled to attract mainstream investors. It comes as publicly traded producers face pressure from investors to keep buybacks and dividends flowing even as many of the top drilling sites have been tapped.

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Acquiring Endeavor is a resounding coup for Diamondback. The company, founded by shale pioneer Autry Stephens, is one of the last remaining closely held producers in the Permian. It has attracted the interest of Exxon, Chevron and ConocoPhillips.

— Joe Ryan and Mitchell Ferman, Bloomberg

Read the full story here.

9:31 a.m.

Fairfax Financial calls short seller report false and misleading

Fairfax Financial Holdings Ltd. is calling the allegations in a short sellers report on the company false and misleading.

After reviewing the 72-page report by Muddy Waters Research, Fairfax says it denies and refutes all of the allegations and insinuations made by the United States-based firm.

In a report last week, Muddy Waters, which said it was short Fairfax, alleged the company manipulated asset values. It said it believed a conservative adjustment-to-book value for the company should be 18 per cent lower than reported.

Short sellers make money when the price of a stock they have sold short falls.

Fairfax shares fell more than 10 per cent the day the Muddy Waters report was released, however, they recovered some of the decline the next day.

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Chairman and chief executive Prem Watsa said Fairfax is a strong and enduring company built over 38 years, committed to integrity, customer service, employee welfare and the communities it operates in.

— The Canadian Press

7:30 a.m.

Stock markets before the opening bell

Stock markets February 12, 2024

Traders paused for breath after optimism about eventual United States Federal Reserve interest-rate cuts and easing inflation pushed the S&P 500 to a new record.

The rally in Big Tech that lifted the S&P 500 above 5,000 for the first time on Friday looked set to extend, as Inc. Nvidia Corp. and Tesla Inc. ticked higher in premarket trading. Moves beyond those standouts were muted, in S&P 500 and Nasdaq 100 futures trading as well as for U.S. Treasuries and the dollar.

The next pressure point for markets is Tuesday’s key consumer price index report, which has the potential to shape timing of a first Fed rate cut. The annual U.S. inflation rate is forecast to have dropped to 2.9 per cent in January from 3.4 per cent the prior month, according to consensus estimates of economists surveyed by Bloomberg. That would be the first reading below three per cent since March 2021.

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“The January CPI numbers are expected to be softening compared to December, but with Fed officials sticking to a cautious script lately, it is hard to think this week’s CPI will change the recent messaging,” said Paul Mackel, the head of global FX research at HSBC Bank PLC. “One would think that many within the Fed would be in favour of a strong dollar to help the disinflation process.”

The S&P/TSX composite index closed

— Bloomberg

What to watch today

The parliamentary budget officer will post a report entitled “Refocusing Government Spending in 2023-24” on the website at at 9 a.m.

PrairieSky Royalty Ltd. and Avis Budget Group Inc. are among companies reporting earnings today.

Recommended from Editorial

Need a refresher on Friday’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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