Form 4: CPPIB Reports CIVI Shares Converted in SM Energy Merger

Canada Pension Plan Investment Board reported the conversion of its 9.5 million Civitas Resources shares into SM Energy stock following a two-step merger completed on January 30, 2026.

Summary

• Canada Pension Plan Investment Board (CPPIB) reported a change in beneficial ownership of Civitas Resources, Inc. (CIVI) common stock.
• The transaction occurred on January 30, 2026, pursuant to a Merger Agreement dated November 2, 2025.
• CPPIB's 9,524,201 shares of Civitas Common Stock were converted as part of a two-step merger involving Civitas Resources, SM Energy Company, and Cars Merger Sub, Inc.
• In the merger, each eligible share of Civitas Common Stock was converted into the right to receive 1.45 shares of SM Energy common stock, with cash paid in lieu of any fractional shares.
• Following the transaction, CPPIB's beneficial ownership of Civitas Common Stock is 0 shares.
• The shares were directly held by CPPIB Crestone Peak Resources Canada Inc. (CP Canada), with CPPIB being an indirect beneficial owner.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a neutral-to-positive event for CPPIB, as it represents the successful completion of a strategic merger, converting their investment in Civitas into a stake in the larger, surviving entity, SM Energy. The transaction itself is a factual reporting of a completed event.

Positives

• The completion of the merger provides a clear path forward for former Civitas Resources shareholders, converting their holdings into shares of SM Energy Company.
• The fixed exchange ratio of 1.45 shares of SM Energy common stock per Civitas share offers a defined value for the transaction.

Negatives

• CPPIB no longer holds direct or indirect beneficial ownership in Civitas Resources, Inc., as the company has been absorbed into SM Energy.

Future Outlook

The filing reports a completed merger transaction, indicating that Civitas Resources, Inc. has been absorbed by SM Energy Company. The future outlook for former Civitas shareholders is now tied to the performance and strategic direction of SM Energy Company.

Industry Context

StockSavvy.ai notes that consolidation continues to be a significant trend in the energy sector, particularly within the exploration and production (E&P) space. Mergers like the one between Civitas Resources and SM Energy are often driven by a desire to achieve economies of scale, optimize asset portfolios, and enhance operational efficiencies in a volatile commodity market. This transaction reflects the ongoing strategic repositioning among mid-cap E&P companies.

Comparison to Industry Standards

• The exchange ratio of 1.45 shares of SM Energy for each Civitas share is a specific valuation metric for this particular transaction. Without details on the pre-merger market capitalizations or premium paid, a direct comparison to industry-standard merger premiums (typically 15-30% over pre-announcement prices) is not possible from this filing alone.
• Similar consolidation moves have been observed with companies like ExxonMobil's acquisition of Pioneer Natural Resources and Chevron's acquisition of Hess, though these were significantly larger in scale. The underlying rationale often involves increasing production, reducing costs, and strengthening balance sheets, which aligns with broader industry trends.

Stakeholder Impact

• Shareholders (former CIVI): Their investment has been converted into SM Energy shares, changing their exposure and future prospects.
• Shareholders (SM Energy): The company's share count and asset base have expanded, potentially impacting future earnings per share and strategic direction.
• Employees (former CIVI): Integration into SM Energy may lead to organizational changes, though the filing does not provide details.

Next Steps

• Former Civitas Resources shareholders now hold shares in SM Energy Company.
• SM Energy Company will proceed with the integration of Civitas Resources' operations and assets.

Key Dates

Keywords

Civitas Resources, SM Energy Company, Merger, Acquisition, Canada Pension Plan Investment Board, CPPIB, Form 4, Beneficial Ownership, Stock Conversion, Energy Sector