(Bloomberg) -- Paulson & Co. reiterated its opposition to Callon Petroleum Co.'s planned takeover of rival Permian Basin crude producer Carrizo Oil & Gas Inc., this time targeting management compensation.
In a letter to the Callon board on Tuesday, along with a 54-slide presentation, Paulson took aim at what it says are $94.5 million of expenses related to the proposed deal plus as much as $40 million in compensation to management of both companies. The New York hedge fund, founded by billionaire John Paulson, has a stake of about 9.5% in Callon.
See Tuesday's statement from Paulson
The attack on the takeover comes just over a month after Paulson's opposition to the deal was first reported. The oil and gas industry is watching closely because the Callon-Carrizo transaction's ultimate fate may determine whether there's an appetite for other mergers of Permian operators.
Paulson is also highlighting once again the how the proposed deal was poorly received by investors. Shares of Callon have slumped 42% since July 15, when it first announced the takeover. It closed Monday at a six-year low.
The issue of executive compensation is also getting increased scrutiny from investors in energy companies. While the U.S. shale sector has been hugely successful in boosting output over the past several years, enriching many management teams in the process, it has a poor track record of rewarding shareholders.
Callon posted its own presentation in defense of the deal, saying the combined company would be self-funded with high-margin oil growth and free cash flow generation. The takeover would be immediately accretive on all key metrics, according to the presentation. Representatives for Carrizo didn't immediately respond to a request for comment.
Shares of Callon and Carrizo were little changed in early trading Tuesday in New York.
To contact the reporters on this story: Simon Casey in New York at scasey4@bloomberg.net;Kriti Gupta in New York at kgupta129@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine Buurma
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