Oil & gas giant Cairn Energy Plc (CNE.L) and North Sea oil producer Nautical Petroleum Plc (NPE.L) have agreed on a recommended cash offer for Cairn to buy Nautical through its Capricorn unit for 450 pence per share in cash, totaling 414 million pounds ($644 million). Nautical shares are surging over 56 percent.
The offer price represents a 51.1 percent premium to the closing price of 297.8 pence per Nautical share on June 12, the last business day before the announcement.
Cairn believes that the acquisition is an attractive opportunity for the firm to expand its existing portfolio in North-West Europe. It will also help the company continue its strategy of balancing its transformational exploration portfolio with appraisal and development assets.
Among the benefits, the deal will provide Cairn with a 25 percent interest in Kraken, a large, North Sea oil development project. It will also enhance Cairn's interest in UK Licence PL1430, including the Catcher, Burgman, Carnaby and Varadero oil discoveries, by 15 percent, thus taking Cairn's overall interest to 30 percent.
The directors of Nautical intend to unanimously recommend that its shareholders vote in favor of the deal.
Capricorn has received irrevocable undertakings and letters of intent over 23.91 million Nautical shares, representing around 27.25 percent of the issued share capital of Nautical.
Last month, Cairn closed the purchase of Agora Oil & Gas AS, a private Norwegian company with non-operated, exploration, appraisal and development assets in the UK and Norwegian North Sea. The cash and stock deal had an enterprise value of $375 million as at January 1.
Simon Thomson, Chief Executive of Cairn, said today, "This acquisition is another step towards building a balanced portfolio of transformational exploration, appraisal and development assets, and complements our recent acquisition of Agora to help build a platform in North West Europe.''
CNE.L is currently up 1.6 percent at 296.49 pence.
NPE.L is surging over 56 percent at 465.3 pence.
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