Tangiers Petroleum is to acquire Jacka Resources via a friendly off-market takeover bid, combining to create an Africa-focused upstream oil and gas company valued at about $80 million.
Tangiers Petroleum is to acquire Jacka Resources via a friendly off-market takeover bid, combining to create an Africa-focused upstream oil and gas company valued at about $80 million.
Under the bid, Tangiers is offering 0.468 shares for every Jacka share.
The Tangiers offer values Jacka shares at 11.2 cents based on Tangiers’ last closing price of 24 cents per share, a 56 per cent premium to Jacka’s last closing price of 7.2 cents.
Upon completing the transaction, existing shareholders in Tangiers will own 53 per cent of the company, with Jacka shareholders owning the remaining 47 per cent.
The newly formed company will have $8 million of cash, with a further $22 million expected to flow in from executed farm-in agreements from Tangiers’ Tarfaya project in Morocco and Jacka’s Odewayne project in Somaliland.
Eve Howell is to remain chairman of Tangiers, while Jacka managing director Bob Cassie will become managing director of the combined entity.
"This transaction is consisten with the strategy adopted by the board and management of Tangiers over the past year, where efforts have been focused on growth in Africa and building a portfolio with balances low risk, moderate reward development and production opportunities with higher risk, and large exploration potential," Ms Howell said.
Jacka chairman Scott Spencer believes the merger will be a good move for shareholder exposure.
“This is a compelling offer for Jacka shareholders and the transition will provide a strong platform to pursue the company-transforming exploration opportunities within the portfolio of the merged entity, both in terms of balance sheet and board,” Mr Spencer said.
“The board and management of Jacka are very focused on the opportunity to create significant value through appraisal and development of the Hammamet West oilfield offshore Tunisia.
“With this transaction shareholders will also gain exposure to a second near-term opportunity through Tangiers’ Tarfaya prospect, scheduled to be drilled in 2014 offshore Morocco, which is emerging as a leading frontier province in Africa.”
Tangiers has agreed to provide Jacka with a $2.5 million loan facility to assist the company’s funding for the first quarter of 2014.
Foster Stockbroking will act as financial adviser with Herbert Smith Freehills as legal counsel.
Both companies have come back from a voluntary trading halt, with shares in Tangiers are down 14 per cent, from losing 1.5 cents of value to trade at 20.5 cents, while Jacka shares are up 22 per cent rising from 7.2 cents to 8.8 cents per share, as of 1.30pm WST.
