Petroleum Africa
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Wednesday, April 16, 2014
The potential merger between Caracal Energy and TransGlobe Energy is off as Caracal has accepted a better offer from GlencoreXstrata. The potential merger between Caracal and TransGlobe was announced in mid-March in a deal that would have resulted in a combined market capitalization of $1.8 billion, but the proposed deal was nixed when Glencore made its all-cash offer.
Glencore and Caracal reached a definitive agreement for the all cash consideration of £5.50 per common share by way of Plan of Arrangement. Glencore’s offer valued Caracal at roughly £2.00 higher than it was trading when the news of the potential TransGlobe deal was announced. As a result of the arrangement with Glencore, Caracal terminated its deal with TransGlobe, paying a termination fee of $9.25 million as required under the terms of the Proposed TransGlobe Merger.
The deal between Glencore and Caracal is expected to close in Q2.
Gary Guidry, Caracal’s president and CEO, commented: “The premium all-cash offer from Glencore is strong recognition of the significant value Caracal has created for its shareholders since inception. This transaction and the significant premium it places on our shares is an excellent outcome for our shareholders. Glencore has been an important supporter and partner of Caracal in Chad and this is a natural progression in the development of this portfolio.”
From Glencore’s perspective, the Arrangement will allow it to take on operatorship and a larger working interest to more fully benefit from the development of Caracal’s Chad oil development and exploration operations. Alex Beard, Glencore’s Head of Oil, commented: “Both companies have had a successful partnership since 2012. This transaction deepens our relationship, adding further value and expertise to our growing oil business in Africa. We believe the combined business will be even better placed to take advantage of the long term opportunities across the African oil sector.”
Ross Clarkson, president and CEO of TransGlobe said: “We are extremely disappointed that such a great business combination has been scuttled before the shareholders of both TransGlobe and Caracal had the opportunity to enjoy the true potential of the assets of the combined companies. TransGlobe will continue with its core strategy, which is to continue to grow our Egypt business and looking for accretive opportunities to enhance shareholder value.”
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