Glencore to buy Chad oil firm Caracal for $1.3bn

Mining company Glencore Xstrata has agreed to buy Chadfocused oil company Caracal Energy for about 800 million pounds ($1.3 billion), a deal that will allow the commodity giant to expand upstream in the oil sector.

The sale puts an end to Caracal’s proposed merger with Canada’s TransGlobe Energy Corporation.

Swiss-based commodity producer and trader Glencore agreed to pay 550 pence per share for Caracal, which has been its partner in Chad since 2012, the two companies said in a joint statement put out by Glencore yesterday. The price represents a 61 percent premium to Caracal’s closing share price on Friday.

Caracal said it had terminated the proposed merger with TransGlobe and had paid a break-fee of $9.25 million to the Canadian company for abandoning the deal, the statement said. Caracal’s shares surged more than 58 percent in London after the announcement on Monday to 540.6 pence. Shares of TransGlobe were up 0.3 percent in Toronto by 1418 GMT.

“Glencore is already in Chad, so they’ll be knowledgeable of the assets, and oil is certainly an area that they have indicated they want to get into to a larger degree to create more diversification. So this acquisition fits in with their strategy,” said Investec analyst Marc Elliott.