Chesapeake Stock Jumps After Icahn Raises Stake, Discloses Talks

Monday, 20 Dec 2010 10:55 AM

 

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Chesapeake Energy Corp., the second-biggest U.S. natural-gas producer, rose the most in six months after billionaire investor Carl Icahn boosted his stake and said he was in talks with management to raise the share price.

Chesapeake, based in Oklahoma City, rose $1.65, or 7.1 percent, to $24.95 at 9:49 a.m. in composite trading on the New York Stock Exchange, the biggest increase since June 3. Before today, it had fallen 10 percent this year.

Icahn increased his ownership to about 5 percent from 2.5 percent, has had and will seek further talks about raising the share price, according to a filing after the close of regular trading Dec. 17. That would make Icahn the second-largest shareholder behind Southeastern Asset Management Inc., which had raised its stake to 12.4 percent as of Sept. 30, according to filings.

Chesapeake Chief Executive Officer Aubrey McClendon, holder of less than half a percent of company stock, has sold $3.58 billion of assets this year to accelerate oil production. Crude prices rose 19 percent above the previous five-year average while oversupply of gas drove prices down 36 percent below the average.

Icahn, 74, agreed on Dec. 15 to buy Dynegy Inc., the third- largest U.S. power producer for $665 million, or $4.7 billion including assumption of debt, 10 percent more per share than an offer by Blackstone Group LP that shareholders rejected on Nov. 23. If successful, the purchase will be Icahn’s largest in 10 years including debt, according to Bloomberg data.

The transaction is opposed by Seneca Capital, the second-largest holder of Dynegy shares.

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