North Sea specialist Serica Energy has rejected a £1bn takeover approach from smaller rival Kistos, it was confirmed on Tuesday.
Kistos, an AIM-listed energy investor, made a cash and share-for-share exchange offer consisting of 0.2932 new Kistos shares and 246p for each Serica share.
At a 25% premium to Serica’s closing share price on Monday, the 382p per share offer values the company at £1.04bn.
The approach was first made at the end of May, with natural gas producer Serica rejecting it in early June. However, details of the bid were only made public on Tuesday as both sides had previously entered into a non-disclosure agreement to explore a potential tie up.
Kistos said its offer had “strong industrial logic, significant value creation potential and achieves increased scale, relevance and trading liquidity for shareholders of both companies” and would create a “leading North Sea champion”.
It called on Serica shareholders to “encourage the [Serica] board to engage in constructive discussions with Kistos regarding the proposed combination”.
Serica confirmed that the merger terms published by Kistos on Tuesday were the same as those outlined in its approach at the end of May, which it rejected.
It also confirmed it had made its own cash-and-stock offer for Kistos earlier this month, which Kistos had rejected. Kistos said Serica had offered 90p in cash plus 1.29 new Serica shares for each Kistos share, which represented a premium of 4%.
Serica said it was “considering its position”, adding that there was no certainty an offer would be made, nor what the terms might be. “Serica shareholders are strongly advised not to take any action,” it added.
As at 1115 BST, shares in Kistos were ahead 5% at 486.8p, while Serica was up 13% at 345.0p.
Danni Hewson, financial analyst at AJ Bell, said: “For now Kistos has been rebuffed, with a counter offer from Serica dismissed by Kistos itself, but the strategic merits of the deal may begin to add up for shareholders now that the negotiations have been made public. It’s certainly the case that the scale of the combined entity would make it a very serious player in this market.”
