Delek Group is set to takeover Ithaca Energy.
Ithaca today confirmed it had entered into definitive support agreement with Delek for a cash takeover.
Under the terms, Delek would snap-up all of the issued and to be issued common shares of Ithaca not currently owned by Delek in a $646million deal.
The offer implies a total enterprise value of approximately $1.24billion, according to Ithaca.
It comes weeks ahead of the start-up of Ithaca’s flagship North Sea Stella development.
Ithaca chairman Brad Hurtubise said: “We are very pleased to announce the offer, which provides an attractive opportunity for all shareholders to secure a premium cash value for their investment following a sustained period of share price growth and at a favourable point in the company’s evolution.
“A special committee of independent directors has fully assessed the offer, with input from the company’s financial advisor and an independent valuator, and believes the Offer is fair and in the best interest of the company and its shareholders and unanimously recommends that the shareholders tender their shares to the offer.”
Delek is an Israeli listed conglomerate with significant natural gas exploration and production activities in the Eastern Mediterranean and an existing 19.7% shareholder in Ithaca.
The takeover was unanimously backed by Ithaca’s board of directors.
The offer is for a cash consideration of C$1.95 per share – this equates to £1.20 per share based on the exchange rate on 3 February 2017.
The offer provides shareholders with the opportunity to crystallise the value of their holdings in cash and represents a 12% premium to the Toronto Stock Exchange (TSX) closing price of C$1.74 per share on 3 February 2017 and a 16% and 27% premium to the 30 day and 60 day volume weighted average prices respectively.
Further details regarding the terms and conditions of the offer and the process for tendering shares will be set out in a takeover bid circular, which is to be mailed to shareholders by the end of March. The tendering process will remain open for a period of at least 35 days.
Last month, Ithaca chief executive Les Thomas said “the company was moving into 2017 in good health”. Its net debt stood at $598million. It recorded a 2016 daily production average of 9,300 boepd.
The Ithaca operated Greater Stella Area is located in the heart of the Central Graben area of the Central North Sea, on the UK Continental Shelf.
Stella is expected to start-up this month after the firm completes a “painstaking electrical inspection programme on the FPF-1”. Its 2017 production is anticipated to be in the range of 19,000 to 22,000 boepd, reflecting the updated Stella start-up schedule.
The firm recently unveiled its 2017 capital investment programme of $70 million, primarily centred on Greater Stella Area activities, including development drilling on the Harrier field.
Its operating expenditure for 2017 is expected to be approximately $18/boe, down nearly 30% on 2016 due to the positive impact of low cost Stella volumes on the production portfolio.
The deal comes days after Shell confirmed it was shedding a string of its North Sea assets in a multi-billion dollar deal. Read more here.