Hicks Muse to Buy Control of Coho Energy

Private buyout firm Hicks, Muse, Tate & Furst moved into oil and gas Monday by agreeing to buy a majority stake in independent producer Coho Energy Inc. for $250 million and use it as a vehicle for further acquisitions.

Hicks Muse said it would buy about 41.67 million Coho shares at $6 per share, which would give it a 62% stake. Dallas-based Coho focuses on exploring and developing oil and gas properties in Oklahoma, Mississippi and Louisiana.

Hicks Muse, also based in Dallas, has spent several billion dollars in building a huge media empire over the last three years and owns a wide variety of other businesses ranging from packaged foods to real estate.

But the Coho deal, expected to close in the fourth quarter, marks Hicks Muse’s first major foray into the oil and gas industry.

Hicks Muse executives said the deal reflects their confidence in the oil industry’s long-term prospects in spite of a recent slump.

Under the deal, a limited partnership managed by Hicks Muse will soon buy about 5.1 million newly issued shares of Coho common stock at $6 each. After Coho’s shareholders approve the deal, expected this fall, Hicks Muse would acquire 36.5 million more new shares, also at $6.

Coho’s shares gained 75 cents on Monday, closing at $5.44 on Nasdaq.