Independents Vintage, Genesis Agree to Merge

Independent Vintage Petroleum Inc., based in Tulsa, has entered into an agreement to acquire Canadian-based Genesis Exploration Ltd., offering C$18.25 per share in cash. The boards of both companies have unanimously agreed to the offer, which puts total consideration, including assumption of Genesis' estimated debt, at C$898 million (US$572 million).

The offer represents a 22% premium over Genesis' closing price of C$15 on March 27, and a 32% premium to its 10-day weighted average trading price. Vintage said it would initially fund the acquisition with existing cash and available committed credit facilities. Based on its recently revised outlook and capital budget for 2001, Vintage expects the transaction to be accretive to this year's earnings and cash flow.

"The acquisition of Genesis builds upon our recent entry into Canada, through the acquisition of Cometra Energy (Canada) Ltd. last year, establishing western Canada as a significant core area," said Vintage CEO S. Craig George. "Both Vintage and Genesis have grown through a common vision dedicated to increasing value to their respective shareholders and this focus will continue."

George said that going forward, the companies' combined technical and management expertise would allow "accelerated exploitation of the assets and provide the ability to fund additional growth opportunities."

Genesis' Donald Sabo, chairman, said the offer recognized the full value of the company for shareholders. "In addition, we are pleased that our employees will be an integral part in building value for Vintage shareholders going forward, as they have for Genesis shareholders in the past."

Under the agreement, Genesis' board has agreed to tender, under lock-up agreements, their common shares, and to recommend that its shareholders tender their shares to Vintage. Genesis also has agreed to not solicit or initiate discussions with another third party concerning a business combination, and Vintage has the right to match a competing offer. The agreement also provides that, under certain circumstances, Vintage may have the right to acquire certain assets of Genesis at fair market value, and that Genesis would pay Vintage a termination fee. Vintage expects to mail an offer to Genesis shareholders, and the offer would remain in effect for at least 21 days.

Genesis' stock soared 21% on the news to $18.07/share and topped the Toronto Stock Exchange's most active list with volume exceeding 17 million shares. Vintage lost 3% to $19.91/share.

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