Serica Energy is acquiring Asia and North Africa focused Pharos Energy in a £145.7 million recommended cash offer which has topped a previous offer for the company.
The 33.6p per share proposal includes a 4p per share special dividend and entitlement to a final dividend of 0.9317p. In total it represents a premium of 20.7% to a 28p per share offer from Ratio, announced in June.
Pharos’s board is now backing the Serica bid, saying it represents a “more compelling and deliverable liquidity opportunity” for the Pharos Shareholders, delivering immediate and certain value in cash to Pharos Shareholders at a level substantially above the Ratio offer.
The Pharos board will propose the adjournment of the Ratio offer shareholder meetings which have been convened for 17 August.
Chris Cox, Serica’s CEO, stated: “The acquisition of Pharos is a compelling opportunity to deliver a first step in our long-standing strategic objective of adding to the diversification of our business through international expansion, on terms that are accretive on a per share basis across all key metrics, with multiple embedded growth options.
“Upon completion the transaction will boost our reserves, resources and add materially cash-generative production, while at the same time delivering an attractive liquidity route for Pharos shareholders.
“Pharos brings a highly experienced regional team and an operating model that mirrors our own focus on cash generation funding both growth and returns.
As we continue to invest in the UK North Sea, with a multi-well rapid return drilling programme set to begin in 2027, this presents a complementary platform from which to grow in South East Asia, a region with increasing energy demand that benefits from a supportive environment for upstream investment.
“With a robust balance sheet and material ongoing cash generation, we continue to analyse multiple opportunities to deliver further M&A and create significant value for shareholders.”
Katherine Roe, Pharos’ CEO, stated: “As announced in our recent trading update, the business is benefitting from strong operational momentum. At the same time, the board of Pharos is delighted to be recommending this offer from Serica, which delivers shareholders a material premium in cash to the Ratio offer.”
DCC Energy deal
Irish energy distributor DCC Energy has agreed a £5.75 billion takeover by a consortium comprising US private equity firms KKR and Energy Capital Partners.
Under the offer, DCC shareholders will receive £65.25 in cash per share, a proposed final dividend of 147.22 pence, and a potential payment of up to £1.25 if DCC can sell its Nexora technology unit for at least $800m.
The offer represents a premium of 36% to DCC Energy’s volume weighted average share price of £49.07 for the 12-month period to April 28 and is higher than DCC Energy’s share price at any point over the last five years.
DCC had rejected the consortium’s initial £4.95bn proposal, saying it undervalued the company.
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