Glencore Xstrata (LON:GLEN) trumped a rival bid for Caracal Energy (LON:CRCL) as the commodities giant splashed out more than £800mln on the Chad-focused oil group.
Canadian-based, but London-listed Caracal had agreed to merge with fellow African oil explorer TransGlobe Energy, but Glencore’s all-cash offer looks to have gazumped their £1.8bn deal.
Glencore is paying £5.50 a share for Caracal, a 61% premium to its closing market price on Friday (£3.42).
Caracal has paid TransGlobe US$9.25mln as a termination fee for pulling out of their proposed merger.
Glencore’s head of oil Alex Beard said: “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.”
Gary Guidry, Caracal’s president and chief executive, hailed the deal.
“The premium all-cash offer from Glencore is strong recognition of the significant value Caracal has created for its shareholders since inception,” he told investors.
“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.”
It followed news of the £3.5bn sale of its Las Bambas copper mine in Peru to a Chinese consortium.
The disposal of the mine – one of its biggest – was one of the regulatory conditions set by China prior to its $35bn acquisition of Xstrata.
The company will use the funds to cut debt and promised to return any leftovers to shareholders.
Glencore’s shares rose 2% to 317.9p on Monday, while Caracal’s stock finished 55% higher at 530p.