Gran Tierra Energy, a Canadian company, offers $226 million to buy UK-based i3 Energy.
The shares of i3 Energy jumped up to 33.7% in the morning on Tuesday after Canada's Gran Tierra Energy made an offer to purchase the British oil producer for 174.1 million pounds (226.23 millions).
The implied value of the deal is 13.92 pences per i3 Energy's share. This represents a 49% premium to its closing price on August 16, which was listed in London.
Ashley Kelty, Panmure Liberum analyst, said: "This deal looks like it's at a premium to the current I3E price...deal is a good one for GTE because it diversifies its portfolio outside of South America and boosts reserves and production."
At 0804 GMT, i3 shares rose 26.27% to 12.16p.
Gran Tierra Energy hopes to build an independent energy company with scale in the Americas. This will include increased production, reserves and cash flow, as well as development options throughout Canada, Colombia and Ecuador.
The combined entity will have approximately 1.4 million acres net in Colombia, 138 000 acres net in Ecuador and about 584 thousand acres net in Canada.
After the merger is complete, i3 Energy's shareholders will own up to 16,5% of the combined business. The shares of i3 Energy will no longer be traded on the AIM Market of the London Stock Exchange or the Toronto Stock Exchange.
The offer includes a "mix-and-match" option that allows i3 Energy shareholders to choose the percentages of cash and Gran Tierra new shares they will receive.
(source: Reuters)
