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Hedge fund Paulson urges Callon to sell itself

Billionaire investor John Paulson's hedge fund on Monday opposed Callon Petroleum Co's proposed $3.2 billion acquisition of Carrizo Oil & Gas Inc, and urged the company to instead consider selling itself.

Adds details from the letter, background

Sept 9 (Reuters) - Billionaire investor John Paulson's hedge fund on Monday opposed Callon Petroleum Co's CPE.N proposed $3.2 billion acquisition of Carrizo Oil & Gas Inc CRZO.O, and urged the company to instead consider selling itself.

Paulson & Co. Inc, which has a 9.5% stake in Callon, in a letter to the company's board said adding Carrizo's "inferior Eagle Ford assets will permanently reduce the attractiveness of Callon to potential acquirers".

Callon offered Carrizo shareholders 2.05 shares for each Carrizo share held, or about $13.12 per Carrizo share based on Callon's closing share price on July 12, representing a 25% premium.

Paulson noted that paying a 25% premium for the acquisition is "unjustifiable" and said Callon will lose its premium valuation as a Permian pure play.

"If the board is truly interested in its shareholders, given the magnitude of the difference between the current stock price of Callon and its takeover value, it should pursue a sale of Callon," the hedge fund said.

Shares of Callon, which have dived 36.25% since the transaction was announced, were up ~10.3% at $4.50 in premarket trading.

Callon was not immediately available for comment.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli)

((Arundhati.Sarkar@thomsonreuters.com; +1 646 223 8780 Ext: 1524; Reuters Messaging: arundhati.sarkar.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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