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(Alliance News) - Reabold Resources PLC said Wednesday it is in the process of evaluating a possible all-share offer for the entire issued and to be issued share capital of Deltic Energy PLC.
The offer, Reabold said, will see 1.5 Reabold shares be exchanged for each Deltic share.
The exchange ratio would give an implied value for the entire existing issued share capital of Deltic of about GBP12.3 million - which is based on a closing price of 0.585 pence per Reabold share on Tuesday. Shares in Reabold Resources closed 1.5% higher in London on Wednesday at 0.59 pence each.
Shares in Deltic - formerly known as Cluff Natural Resources - closed 0.4% lower at 0.80p.
If the deal is completed, Reabold will hold about 76% of the combined share issue.
"Reabold believes that the possible offer, if made and successfully completed, would deliver clear synergistic benefits and cost savings which should potentially serve to accelerate the delivery of the enlarged group's strategy," the company said.
Reabold continued: "In addition, Reabold believes that the complementary nature of the existing Reabold and Deltic portfolios, particularly in the emerging Zechstein oil and gas play underpinned by Reabold's recent West Newton discovery, should facilitate optimal capital deployment both within the proposed enlarged group's expanded portfolio and for potential new project investments."
Reabold noted it will only go ahead with the deal if the board of Deltic agree to the merger.
"Following initial conversations with a number of Deltic's largest shareholders, Reabold had recently commenced preliminary discussions with Deltic to seek such a recommendation. However, Reabold was disappointed to receive a letter from the Deltic board earlier this afternoon unequivocally rejecting the possible offer," Reabold added.
The company has until August 12 to make a firm offer or back away.
By Paul McGowan; paulmcgowan@alliancenews.com
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