SM Energy Co 8-K

What Happened
SM Energy Company (SM) confirmed the previously announced two-step merger with Civitas Resources, Inc. (Civitas) and filed a supplemental disclosure to the joint proxy/prospectus after receiving multiple demand letters alleging disclosure deficiencies. The merger agreement (entered Nov 2, 2025) provides for (1) Merger Sub to merge into Civitas (Civitas survives as SM subsidiary) and (2) Civitas then to merge into SM (SM survives). SM filed a Form S-4 on Dec 5, 2025 (declared effective Dec 19, 2025). Special meetings of SM and Civitas stockholders are scheduled for Jan 27, 2026. SM says it denies the demand letters’ allegations but is voluntarily supplementing disclosures to avoid delay, distraction or expense.

Key Details

• Evercore valuation inputs and results: SM NAV implied equity value per share $15.47–$22.63 (SM close $20.54 on Oct 30, 2025); Civitas NAV $23.22–$33.09 (Civitas close $28.72; implied offer $29.78 based on 1.45x exchange ratio).
• Discounted cash flow ranges (Evercore): SM implied equity per share — Perpetuity method $9.90–$27.68; Terminal multiple $7.99–$18.44. Civitas — Perpetuity $19.00–$48.29; Terminal multiple $11.37–$29.28.
• Net debt / shares used: SM estimated net debt/cash ≈ $2,574 million and ~116.8 million fully diluted shares (as of Oct 2025); Civitas pro forma net debt/cash ≈ $4,945 million and ~87.1 million fully diluted shares.
• Valuation methodology notes: Evercore used NAV and DCF approaches, applying reserve-category discount rates of 8%–30% for NAV and WACC discount rates of 8.50%–10.00% for DCF analyses; comparable-company TEV/EBITDAX 2026E median ~3.3x.

Why It Matters
The filing confirms the transaction timeline and supplies additional valuation detail investors can use to compare the merger consideration to market prices and analyst targets. The supplemental disclosures were provided in response to shareholder demand letters (which SM denies substantively) to reduce the risk of delays or litigation that could affect timing. Investors should review the effective S-4 and the joint proxy/prospectus (available on the SEC website and the companies’ investor pages) before voting or making investment decisions; the filing also reiterates customary forward-looking statement warnings.