DVN Stock Rises As Top Shareholder Reportedly Calls For Sale — What’s Behind The Activist Push?

• The activist argued that Devon’s expanded portfolio following the Coterra merger is too complex and contributes to a valuation discount.
• Devon previously said the Coterra combination could deliver $1 billion in annual pre-tax synergies by the end of 2027.
• Earlier this year, Kimmeridge, which held about a 1.4% stake, reportedly urged Devon to sell non-core assets.

Devon Energy (DVN) was in the spotlight Wednesday after activist hedge fund TOMS Capital Management reportedly urged the oil producer to explore strategic alternatives, including a potential sale.

DVN shares gained around 3% at the time of writing.

TOMS Capital Pushes For A Sale

According to a CNBC report on Wednesday, TOMS, which is one of Devon’s top shareholders, argued that Devon’s portfolio has become overly complex following its merger with Coterra Energy and believes that complexity is contributing to a valuation discount.

TOMS had previously pushed Devon to streamline its portfolio through asset sales but is now calling for a sale of the entire company. The fund argues that a strategic buyer could subsequently divest unwanted assets, shifting the execution risk of those sales away from Devon shareholders.

At the time of writing, Devon Energy has not responded to Stocktwits’ request for comment on these developments.

Pressure Builds After Coterra Deal

Devon completed its all-stock merger with Coterra in May, creating a larger shale producer with operations across the Delaware Basin, Marcellus, Eagle Ford, Anadarko and the Rockies.

The company has said the combination could generate $1 billion in annual pre-tax synergies by the end of 2027 through lower costs and more efficient capital spending. Devon also authorized an $8 billion share-buyback program following the merger. DVN shares have gained roughly 7% since the merger was completed.

TOMS Capital isn’t alone in calling for changes. Energy-focused investor Kimmeridge, which held about a 1.4% stake, urged Devon to rapidly sell non-core assets and explain its post-merger strategy, according to a Reuters report. Kimmeridge argued that a more focused portfolio could improve capital efficiency and shareholder returns.

Devon itself disclosed that it began reviewing its combined asset portfolio following the Coterra merger.

Retail’s Take On DVN

Retail sentiment for DVN on Stocktwits remained ‘bearish’ over the past 24 hours.

The stock has gained more than 26% so far this year.

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