Oil producer Gran Tierra Energy has announced a £175m deal to acquire its London-listed peer i3 Energy.
Under the terms of the deal, which was announced in the early hours of this morning, Gran Tierra said it would offer one new Gran Tierra share for every 207 i3 Energy shares held as well as 10.43p per share in cash per i3 Energy share.
Each shareholder will also be in line to receive 0.2564p in lieu of a dividend that had already been announced.
Once completed, the deal would mean i3 shareholders would own up to 16.5 per cent of Gran Tierra. This Alberta-headquartered oil and gas exploration firm operates largely out of South America.
The offer also contains a 'mix and max' facility that will allow shareholders in i3 Energy, which is also listed in Toronto and produces over 22,000 barrels of oil equivalent per day (boepd), to vary the proportions in which they receive cash and shares.
The deal follows what has been a testing few years for i3 Energy. During that time, its share price has fallen from 28p to just over 9p despite a global uptick in interest in oil and gas.
Last week, it published its second-quarter results, in which it announced a profit before tax of $24.3m, (£19m) and a dividend of £3m.
Commenting on the acquisition, Gary Guidry, president and chief executive officer of Gran Tierra said: "We are thrilled to announce this acquisition, which marks a significant milestone in diversifying our portfolio while strengthening our asset base.
"By integrating these high-quality, operated assets, including low-decline production, large resources in place and a substantial land base, we are not only enhancing our asset base but also aligning with our long-term strategic vision," Guidry added.
Majid Shafiq, chief executive officer of i3 Energy, said: "We believe that the acquisition presents an exceptional opportunity for i3 Energy's shareholders.
"The acquisition represents the culmination of a thorough process to realise the maximum value available for shareholders and offers significant upside potential; it expedites the realisation of fair value, with a cash premium and incremental upside through continued ownership in the combined group, without necessitating additional capital investment, time, or operational risk," Shafiq continued.
By City AM
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