Tullow Oil will buy Capricorn Energy in an all-stock deal valued at £657m ($827m) to create a leading African energy company, listed in London.
Investors in Capricorn, formerly Cairn Energy, will receive 3.8068 Tullow shares for each share they hold and will own 47% of the combined group which will be led by Tullow CEO Rahul Dhir. Capricorn boss Simon Thomson will step down but will chair a committee to lead the integration.
The combined group will have a diversified pan-African upstream portfolio across countries like Ghana, Egypt, Gabon, and Ivory Coast and is expected to be an important gas supplier in Egypt and Ghana.
The companies said they expect to save $50m annually within two years of the completion of the deal.
Commenting on the deal, Tullow CEO Rahul Dhir, said: “Our two companies are a perfect fit and this combination draws on the proud heritage of both Tullow and Capricorn to create a leading African energy company. With renewed focus and ambition, the Combined Group will have the financial flexibility to accelerate organic growth and pursue further opportunities as they arise, while creating value for shareholders and host countries alike
Morgan Stanley and Rothschild & Co acted as Capricorn’s financial advisers, while Tullow was backed by PJT Partners and Barclays.
