Oklahoma City-based SandRidge Energy Inc. (NYSE: SD) has amended its agreement to acquire Permian Basin-focused Arena Resources Inc., Tulsa, Okla., (NYSE: ARD), increasing its stock and cash consideration to approximately $1.8 billion.

When the deal was first announced, Sand­Ridge agreed to pay 4.7771 shares and $2.50 in cash per Arena share for a total of $40 per Arena share, representing a 17% premium to the April 1 closing price. SandRidge also agreed to issue 191 million new shares in the acquisition.

Now, each Arena share will be converted in the merger into the right to receive 4.7771 shares of SandRidge stock plus $4.50 per share in cash. Arena may also solicit other offers for a 30-day period ending July 1. The termination fee will be reduced from $50 million to $39 million if Arena accepts another company’s offer.

Arena chairman and co-founder Tim Rochford says, “The amended merger allows for a ‘go-shop’ period, an increase in the cash consideration and a lower termination fee…We are confident that upon completion of this period, we will be able to close the transaction.”

SandRidge chief executive Tom Ward is also confident. “We continue to believe the combination realizes numerous synergies and creates a stronger platform from which to grow production across a balanced and concentrated West Texas asset base.”

Arena has $63.6 million cash on hand and no debt. The combined enterprise value is approximately $6.2 billion, with Arena shareholders holding 42% of the combined entity.

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