Ophir Energy agrees to Medco takeover

(Sharecast News) - Exploration and production group Ophir Energy has agreed to be taken over by Indonesia's Medco in a deal that values the company at around £390.6m.Under the terms of the acquisition, Medco will pay 55p per share in cash, which is a 65.7% premium to the Ophir closing share price on Monday. The agreement comes after Ophir rejected an offer of 48.5p a share from Medco earlier this month, on the basis that it undervalued the group.Medco said its Indonesian oil and gas portfolio is a "strong fit" with Ophir's Southeast Asia assets and the combined asset base will generate "meaningful and diversified" production cash flows which support development projects and enhance credit quality.Ophir said its directors consider the terms of the deal to be fair and reasonable and intend to unanimously recommend that shareholders vote in its favour.The company's chairman, Bill Schrader, said: "The transaction delivers upfront value in cash to Ophir shareholders for the strategy that the Ophir Directors set out in September 2018. The Ophir board believes that the Medco offer reflects the future prospects of Ophir's high-quality assets, as reflected in the premium of 65.7% to the closing price of 33.20 pence per Ophir Share on 28 December 2018."Medco chief executive Roberto Lorato said: "The enhanced scale, diversification and growth opportunities of this acquisition would create benefits for employees, partners and host countries, and further strengthens Medco's position as a leading independent oil and gas player in Southeast Asia."In Medco's view, the combined business will hold a more balanced regional portfolio of producing and development assets, better able to withstand macroeconomic volatility, and will have meaningful production and cash flows to improve Medco's credit position and the ongoing development of the portfolio."The deal, which is expected to close in the first half of this year, requires the approval of 75% of Ophir shareholders.At 1120 GMT, the shares were up 6.6% to 53.93p.