Irish oil and gas explorer and producer Petroceltic International Plc (LON:PCI) has agreed to buy Melrose Resources plc (LON:MRS) in an all-stock deal valuing the British sector player at some GBP165m (USD259.4m/EUR210m), the pair said on Friday.
The combination will create an independent oil and gas company focused on North Africa, the Mediterranean and Black Sea, with a portfolio including production, development and high-impact exploration assets, the companies said.
Under the deal terms, Petroceltic is paying 17.6 new own shares for every Melrose share, with the target to also pay to its shareholders a dividend of GBP0.047 a share.
The merger will give existing Melrose shareholders 46% in the combined company, while Petroceltic’s stockholders will have the other 54%, the companies said.
The enlarged group will have an increased financial flexibility, allowing it to pursue growth through active exploration drilling and participation in the future development of Petroceltic’s Ain Tsila gas development in Algeria.
After the merger, the combined company will seek an additional premium listing in London, which the two firms see as a means to attract investors and funds.
Melrose board, advised by Lambert Energy Advisory, N+1 Brewin and HSBC Holdings Plc (LON:HSBA), deemed the terms of the deal fair to shareholders and plans to recommend them to vote in favour of it at their meeting to be scheduled around 20 September.
The transaction will see Melrose become a private company operating as a fully-owned unit of Petroceltic.
Completion, expected to take place on 10 October, also needs to secure clearance from the Bulgarian Commission on Protection of Competition.
Melrose is an oil and gas exploration, development and production company with interests in Egypt, Bulgaria, Romania, the US, Turkey and France.