8-K: California Resources to Acquire Berry Corp. in Stock Deal

Sentiment:

Merger Announcement 17 September 2025 4:50 PM

📋All filings for California Resources CORP

California Resources Corporation will acquire Berry Corporation (bry) in an all-stock merger, with Berry becoming a wholly-owned subsidiary.

Delay expectedThe 'Outside Date' for consummation of the Merger is March 14, 2026.If regulatory approvals (HSR Act, FERC Approval) are not satisfied by the Initial Outside Date, either party may extend the Outside Date by three months, up to two times, by providing written notice.

Capital raiseParent is expected to arrange debt financing in connection with the Transactions.The transaction contemplates the refinancing of any outstanding Indebtedness of Berry Corporation.Parent and Merger Sub have, and will maintain, available immediately available funds and/or lines of credit necessary to consummate the Transactions, including refinancing.

Summary

California Resources Corporation (Parent or CRC) entered into an Agreement and Plan of Merger with Berry Corporation (bry) (Company or Berry) and Dornoch Merger Sub, LLC on September 14, 2025.
Merger Sub, a wholly-owned subsidiary of CRC, will merge with and into Berry, with Berry surviving as a direct, wholly-owned subsidiary of CRC.
Each outstanding share of Berry Common Stock will be converted into 0.0718 shares of CRC Common Stock (the Exchange Ratio).
Certain Berry restricted stock units (RSUs) and performance-based restricted stock units (PSUs) will accelerate and be cashed out at the Equity Award Cash-Out Price (Parent Stock Price multiplied by Exchange Ratio).
Other Berry RSUs and PSUs will convert into Parent RSUs, with the number of Parent shares adjusted by the Exchange Ratio and retaining original vesting terms (for RSUs) or converting to time-based vesting (for PSUs).
The merger is intended to qualify as a reorganization for U.S. federal income tax purposes.
Consummation of the merger is subject to customary conditions, including the Requisite Company Vote, expiration/termination of HSR Act waiting period, FERC Approval, effectiveness of the Registration Statement, and NYSE listing approval for CRC shares.
The merger agreement includes termination rights for both parties and specifies a Company Termination Fee of $12,044,370.00 under certain circumstances.
Parent will be responsible for certain fees and expenses related to regulatory filings and will reimburse Berry for reasonable out-of-pocket costs up to $5,000,000 under specific termination scenarios.

Sentiment

Score: 7

Explanation: The filing announces a strategic merger, generally viewed as a positive for growth and consolidation. The boards of both companies have approved the deal and a fairness opinion was obtained for Berry shareholders. While risks are present, they are standard for such transactions.

Positives

The Berry Board unanimously determined the transactions are advisable, fair to, and in the best interests of the Company and its stockholders.
Guggenheim Securities, LLC provided an opinion that the Exchange Ratio is fair from a financial point of view to Berry stockholders (other than Parent and its Subsidiaries).
The Parent Finance Committee unanimously determined the agreement and transactions are advisable, fair to, and in the best interests of Parent.

Negatives

The filing does not explicitly state any negatives, but potential risks and costs associated with the merger are outlined in the 'risks' section.

Risks

Transaction costs associated with the merger.
Unknown liabilities that may arise from the transaction.
Adverse effects on the market price of CRC's or Berry's common stock due to transaction announcements.
Challenges in successfully integrating the businesses of CRC and Berry.
Inability to achieve projected synergies or taking longer than expected to achieve them.
Risks related to financial community and rating agency perceptions of CRC, Berry, or the industry.
Potential impact of general economic, political, and market factors on CRC, Berry, or the transaction.
Occurrence of any event, change, or circumstance that could lead to the termination of the transaction.
Risk that Berry stockholders may not approve the transaction.
Disruption of management time from ongoing business operations due to the transaction.
Effects of the announcement, pendency, or completion of the transaction on the ability of CRC and Berry to retain customers, key personnel, and maintain supplier relationships.
Risk that necessary regulatory approvals may not be obtained or may be obtained subject to unanticipated conditions.
Risks that any other closing conditions to the transaction may not be satisfied in a timely manner.
Risks related to the application of any applicable California state Law following the date of the agreement, or any proceeding to enforce such application (Specified Effects).

Future Outlook

The merger is expected to result in Berry becoming a wholly-owned subsidiary of California Resources Corporation. The parties intend for the merger to qualify as a tax-free reorganization for U.S. federal income tax purposes. The combined entity anticipates achieving synergies and integrating operations, though the realization of these benefits is subject to various risks and uncertainties, including market conditions and regulatory approvals. The Registration Statement will include a proxy statement and prospectus to inform stockholders about the transaction.

Management Comments

The Company Board unanimously determined that the transactions contemplated by this Agreement, including the Merger, are advisable, fair to, and in the best interests of, the Company and the holders of shares of the Company's common stock.
The Company Board approved and declared advisable this Agreement and the Transactions and resolved to recommend the holders of shares of Company Common Stock approve the adoption of this Agreement and approve the Transactions.
The Finance Committee of the Parent Board unanimously determined that this Agreement and the Transactions are advisable, fair to, and in the best interests of, Parent and approved and declared advisable this Agreement, the issuance of Parent Common Stock in the Merger and the Transactions.

Industry Context

This merger represents a consolidation within the oil and gas exploration, development, and production industry. Such transactions are common as companies seek to achieve economies of scale, enhance operational efficiencies, and strengthen market position amidst evolving commodity prices and regulatory landscapes. The focus on California-based resources suggests a regional consolidation strategy.

Comparison to Industry Standards

The filing does not provide specific comparable companies, projects, or results to assess the transaction against global industry benchmarks.
The 'Company Material Adverse Effect' and 'Parent Material Adverse Effect' definitions include a carve-out for effects that disproportionately affect the company compared to 'similarly situated industry participants', implying an internal benchmark against industry peers without naming them.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Directors of Surviving Corporation	Berry Corporation Board of Directors	Dornoch Merger Sub, LLC Board of Managers	Effective Time of Merger	Merger of Merger Sub into Berry Corporation, with Berry surviving as a wholly-owned subsidiary of Parent.
Officers of Surviving Corporation	Berry Corporation Officers	Dornoch Merger Sub, LLC Officers	Effective Time of Merger	Merger of Merger Sub into Berry Corporation, with Berry surviving as a wholly-owned subsidiary of Parent.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Certificate of Incorporation Amendment	The certificate of incorporation of Berry Corporation will be amended and restated to be in the form set forth in Exhibit A to the Merger Agreement.	Effective Time of Merger	This will change the corporate governance structure of Berry Corporation as it becomes a wholly-owned subsidiary, including its authorized capital stock (1,000 shares of common stock, par value $0.01 per share) and director/officer liability provisions.
Bylaws Amendment	The bylaws of Berry Corporation will be amended and restated to be in a form mutually agreed to by the parties.	Effective Time of Merger	This will align Berry's operational governance with California Resources Corporation's standards as a wholly-owned subsidiary.

Legal Proceedings

The filing mentions 'Transaction Litigation' related to the Agreement or Transactions that may be brought against the Company or Parent or their respective board members.
The Company and its Subsidiaries are not subject to any pending or threatened Proceedings under Environmental Laws that would reasonably be expected to result in a Company Material Adverse Effect.
There are no outstanding claims, assessments, or deficiencies against the Company or its Subsidiaries in respect of any income or other material Taxes that have been asserted in writing or, to the Knowledge of the Company, threatened by any Taxing Authority, except as would not reasonably be expected to have a Company Material Adverse Effect.

Related Party Transactions

Since December 31, 2022, no contracts, transactions, arrangements or understandings between the Company or any of its Subsidiaries and any other Person are in existence that were not, but were required to be, disclosed under Item 404 of Regulation S-K of the Securities Act (except for normal salaries, bonuses, and expense reimbursements).

Stakeholder Impact

Shareholders of Berry Corporation will receive shares of California Resources Corporation common stock, converting their ownership in Berry into ownership in CRC.
Employees of Berry Corporation who remain employed will receive comparable compensation and benefits for a period of 12 months post-merger, with certain service credits and waiver of pre-existing conditions for health plans.
Directors and officers of Berry Corporation will receive indemnification and D&O insurance coverage for a period of six years post-merger for acts or omissions occurring prior to the Effective Time.
Customers, suppliers, licensors, licensees, distributors, and lessors of both companies are expected to maintain existing relationships, with commercially reasonable efforts to preserve goodwill and assets.

Next Steps

Berry Corporation will prepare and file a proxy statement (Proxy/Prospectus) with the SEC.
California Resources Corporation will prepare and file a registration statement on Form S-4 (Registration Statement) with the SEC.
Both parties will respond promptly to SEC comments to have the Registration Statement declared effective.
The Proxy/Prospectus will be mailed to Berry stockholders.
Berry will convene a Company Stockholders Meeting to obtain the Requisite Company Vote for the merger.
California Resources Corporation will cause its shares to be approved for listing on the NYSE.
Both parties will cooperate to obtain Antitrust Approval under the HSR Act and FERC Approval under the FPA.
Berry will cooperate with Parent to delist Berry Common Stock from NASDAQ and deregister under the Exchange Act after the Effective Time.
Berry will adopt resolutions to terminate its 401(k) Plan if requested by Parent.

Key Dates

Date	Description
2024-11-06	Date of Senior Secured Term Loan Credit Agreement for Berry Corporation.
2024-11-25	Date of CRC's Current Report on Form 8-K.
2024-12-24	Date of Senior Secured Revolving Credit Agreement for Berry Corporation and First Amendment to Term Loan Credit Agreement.
2024-12-31	Date of Company Reserve Reports for Berry Corporation; fiscal year end for CRC's and Berry's Annual Reports on Form 10-K.
2025-01-13	Date of Confidentiality Agreement between Berry Corporation and California Resources Corporation.
2025-01-22	Date of Berry's Current Report on Form 8-K.
2025-03-03	Date of CRC's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
2025-03-13	Date of Berry's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
2025-03-19	Date of CRC's definitive proxy statement for its 2025 Annual Meeting of Stockholders.
2025-04-07	Date of Berry's definitive proxy statement for its 2025 annual meeting of stockholders.
2025-05-06	Date of CRC's Current Report on Form 8-K.
2025-05-22	Date of Berry's Current Report on Form 8-K.
2025-06-23	Date of CRC's Current Report on Form 8-K.
2025-06-30	Date of CRC's balance sheet in its Quarterly Report on Form 10-Q for the three months ended June 30, 2025; date for 90% of present value of Berry's Oil and Gas Properties.
2025-08-05	Date of formation of Dornoch Merger Sub, LLC.
2025-09-10	Close of business date for Berry's outstanding common stock, RSUs, and PSUs.
2025-09-12	Close of business date for Parent's outstanding common stock, ESPP shares, RSUs, and PSUs.
2025-09-14	Date of report and earliest event reported: Agreement and Plan of Merger entered into.
2025-09-17	Date of signing of the 8-K report.
2026-03-14	Initial Outside Date for the consummation of the Merger, subject to up to two three-month extensions.

Recommendation

hold

For existing Berry Corporation shareholders, the recommendation is 'hold' as the company is being acquired in an all-stock transaction. Shareholders will receive shares of California Resources Corporation, effectively converting their investment. The fairness opinion suggests the exchange ratio is financially sound for Berry shareholders. Investors should evaluate California Resources Corporation's prospects and their comfort with holding CRC stock post-merger. For investors considering Berry, the opportunity to acquire Berry shares at a discount to the implied CRC value (if any) would be the primary driver, otherwise, direct investment in CRC would be more appropriate.

Keywords

Merger, Acquisition, Oil and Gas, Energy, SEC Filing, 8-K, California Resources Corporation, Berry Corporation, Stock-for-Stock, Corporate Action

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