Investors who kept the faith with portfolio holding Rice Energy (NYSE: RICE) woke to some good news on Monday morning. Rice shares jumped by 28% on news that it would be acquired by fellow portfolio holding EQT Corporation (NYSE: EQT). Shares of EQT slumped 7% on the announcement.

Under the agreement, EQT will acquire all of the outstanding shares of Rice common stock for approximately $6.7 billion – consisting of 0.37 shares of EQT common stock and $5.30 in cash per share of Rice common stock. EQT will also assume or refinance approximately $1.5 billion of net debt and preferred equity. The transaction brings together two of the top Marcellus and Utica producers and is expected to close in the fourth quarter of 2017. 

EQT will also obtain Rice’s midstream assets, including a 92% interest in Rice Midstream GP Holdings LP, which owns 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners LP (NYSE: RMP), and the retained midstream assets currently held at Rice. The retained midstream assets, which EQT announced it would sell to EQT Midstream Partners LP (NYSE: EQM) in the future through drop-down transactions, are expected to generate ~$130 million of EBITDA in 2018.

Based on Friday’s closing prices, the deal valued Rice shares at $27.04, which represented a 37% premium. But EQT shares fell on the news, and the current valuation of the deal puts the acquisition value at $25.42 a share for Rice, which is about 2% above the current share price. 

What should investors do? It would be understandable to use this opportunity to take profits in Rice and exit your position now. However, consensus estimates from 19 analysts covering EQT as reported by the subscription-only S&P Global Market Intelligence database indicate a mean price target for EQT of $74.32 a share within 18 months. That would imply a 37% upside potential from the current price. Should EQT achieve that price by the time the acquisition closes, that would imply a final acquisition price for Rice that is 31% higher than the current price. 

Perhaps that isn’t enough upside to convince you to hold onto your position. Rice’s surge puts the company up 17% year-to-date, which isn’t bad considering the bear market the energy sector has been experiencing. Further, if you hold a large position in Rice it would probably be a good idea to take some of that money off the table. But considering that this acquisition is likely to benefit EQT, and shares are already oversold in my view, I recommend holding your Rice shares for now.