Chesapeake-Southwestern tie-up could create ‘a must-own,’ says Jefferies

Jefferies notes that Reuters recently reported that Chesapeake (CHK) is in talks to acquire Southwestern Energy (SWN) to potentially create the largest natural gas producer in the U.S. The firm, which believes a potential Chesapeake-Southwestern combination “makes industrial logic,” argues that if “done right,” such a deal would create “a must-own.” The firm, which continues to believe that the sector requires more consolidation to take out costs and grow resource bases, has a Buy rating and $117 price target on Chesapeake shares and a Buy rating and $9.50 price target on shares of Southwestern.