Glen­core to buy Chad oil firm Cara­cal for $1.3bn

Daily Trust - - REUTERS -

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.

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