TransGlobe Energy Corp. (TSE:TGL), a Canadian oil producer focused on Egypt, agreed to be acquired by Caracal Energy Inc. (LON:CRCL), which operates in Chad, for about C$696.2 million in stock, in a move that will create a group valued at $1.8 billion.
Caracal will pay 1.23 shares for each share of TransGlobe, the Calgary-based companies said in a joint statement on March 15. The deal values TransGlobe stock at C$9.32, an 11 percent premium to its closing price on March 14. TransGlobe has 74.7 million shares outstanding.
It is expected that Caracal shareholders would hold about 65.6 percent and former TransGlobe shareholders would hold approximately 34.4 percent of the shares in the new company.
TransGlobe closed up 3.3 percent to C$8.41 in Toronto on March 14, giving it a market value of C$624.7 million. Caracal was down 3.2 percent to 397 pence at 12:57 GMT in London today.
The TransGlobe/Caracal merger will create one of the largest independent Africa-focused oil producers, with current combined oil production of 25,100 barrels a day and a target average of 31,000 to 34,000 this year, according to the statement.
Total market value of the new company would be approximately $1.8 billion, based on March 14 closing prices, the companies said.
“Through the combination of complementary asset bases, we will create a solid regional platform for compounding reserves and production growth,” Caracal Chief Executive Officer Gary Guidry said in the statement.
The transaction would result in an "improved financial position" with a pro forma cash position of $302 million, a growing cash flow profile, and no net debt as at Dec. 31, 2013.
"This transaction will clearly benefit both companies and their shareholders, as the enhanced scale will expedite production growth and increase cash flow," added Guidry, who will be the head of the merged company.
The new company would have oil production in Chad and Egypt and an interest in assets in Yemen. Caracal’s oilfields are close to those operated by ExxonMobil, which pumps about 100,000b/d in Chad. The oil is exported by pipeline through Cameroon.
TransGlobe and Caracal are forecasting the new venture would have "strong growth in oil production and reserves" from development and exploration in Chad and Egypt.
They said the enhanced scale created by the merger would provide a platform for future organic and acquisition growth in Africa.
The merged company, which will operate under the Caracal name, plans to list on the Toronto Stock Exchange.
Caracal was advised by RBC Capital Markets while TransGlobe was advised by Scotiabank.
Caracal, previously called Griffiths Energy International Inc., changed its name and completed an initial public offering in London last year. The company was formed in 2009 by Brad Griffiths, an investment banker who died in a boating accident in July 2011.
The TransGlobe/Caracal transaction comes as Canadian energy companies show a renewed appetite for deal making after a slow 2013 as commodity prices improve. Last month, Canadian Natural Resources Ltd. (TSE:CNQ) agreed to acquire Devon Energy Corp.'s (NYSE:DVN) Western Canadian natural gas and light oil assets for about C$3.125 billion. Also last month, Calgary-based Baytex Energy Corp. (TSE:BTE) signed a deal to buy Australia's Aurora Oil and Gas Ltd. (TSE:AEF) for C$1.8 billion.
Reported by Proactive Investors 12 hours ago.
Caracal will pay 1.23 shares for each share of TransGlobe, the Calgary-based companies said in a joint statement on March 15. The deal values TransGlobe stock at C$9.32, an 11 percent premium to its closing price on March 14. TransGlobe has 74.7 million shares outstanding.
It is expected that Caracal shareholders would hold about 65.6 percent and former TransGlobe shareholders would hold approximately 34.4 percent of the shares in the new company.
TransGlobe closed up 3.3 percent to C$8.41 in Toronto on March 14, giving it a market value of C$624.7 million. Caracal was down 3.2 percent to 397 pence at 12:57 GMT in London today.
The TransGlobe/Caracal merger will create one of the largest independent Africa-focused oil producers, with current combined oil production of 25,100 barrels a day and a target average of 31,000 to 34,000 this year, according to the statement.
Total market value of the new company would be approximately $1.8 billion, based on March 14 closing prices, the companies said.
“Through the combination of complementary asset bases, we will create a solid regional platform for compounding reserves and production growth,” Caracal Chief Executive Officer Gary Guidry said in the statement.
The transaction would result in an "improved financial position" with a pro forma cash position of $302 million, a growing cash flow profile, and no net debt as at Dec. 31, 2013.
"This transaction will clearly benefit both companies and their shareholders, as the enhanced scale will expedite production growth and increase cash flow," added Guidry, who will be the head of the merged company.
The new company would have oil production in Chad and Egypt and an interest in assets in Yemen. Caracal’s oilfields are close to those operated by ExxonMobil, which pumps about 100,000b/d in Chad. The oil is exported by pipeline through Cameroon.
TransGlobe and Caracal are forecasting the new venture would have "strong growth in oil production and reserves" from development and exploration in Chad and Egypt.
They said the enhanced scale created by the merger would provide a platform for future organic and acquisition growth in Africa.
The merged company, which will operate under the Caracal name, plans to list on the Toronto Stock Exchange.
Caracal was advised by RBC Capital Markets while TransGlobe was advised by Scotiabank.
Caracal, previously called Griffiths Energy International Inc., changed its name and completed an initial public offering in London last year. The company was formed in 2009 by Brad Griffiths, an investment banker who died in a boating accident in July 2011.
The TransGlobe/Caracal transaction comes as Canadian energy companies show a renewed appetite for deal making after a slow 2013 as commodity prices improve. Last month, Canadian Natural Resources Ltd. (TSE:CNQ) agreed to acquire Devon Energy Corp.'s (NYSE:DVN) Western Canadian natural gas and light oil assets for about C$3.125 billion. Also last month, Calgary-based Baytex Energy Corp. (TSE:BTE) signed a deal to buy Australia's Aurora Oil and Gas Ltd. (TSE:AEF) for C$1.8 billion.
Reported by Proactive Investors 12 hours ago.