Gran Tierra agrees £174m acquisition of i3 Energy

20th Aug 2024 07:21

(Sharecast News) - Gran Tierra Energy has agreed to acquire i3 Energy, it was announced on Tuesday morning, in a cash and share deal worth £174.1m.

The deal, which would be implemented through a court-sanctioned scheme of arrangement, would see Gran Tierra acquiring the entire issued and to-be-issued share capital of the AIM-traded i3 Energy.

Under the terms of the acquisition, i3 Energy shareholders would receive 10.43p in cash and one new Gran Tierra share for every 207 i3 Energy shares held.

Additionally, shareholders would receive a 0.2565p dividend per share, bringing the total value of the offer to 13.92p per i3 Energy share, representing a 49% premium to the share price as of 16 August.

The acquisition would result in i3 Energy shareholders owning up to 16.5% of the combined entity, which would have significant oil and gas production assets across Canada, Colombia, and Ecuador, with a diversified portfolio that enhances capital allocation and investor access.

It was expected to be completed in the fourth quarter, subject to regulatory approvals and shareholder votes.

The i3 Energy board unanimously recommended the offer, citing the strategic benefits and enhanced financial position the merger would bring to both companies.

"We believe that the acquisition presents an exceptional opportunity for i3 Energy's shareholders," said i3 chief executive officer Majid Shafiq.

"The acquisition represents the culmination of a thorough process to realise the maximum value available for shareholders and offers significant upside potential; it expedites the realisation of fair value, with a cash premium and incremental upside through continued ownership in the combined group, without necessitating additional capital investment, time, or operational risk.

"This business combination will significantly enhance scale, thereby improving capacity to drive growth, production, and cash flows for the benefit of all shareholders and local stakeholders."

Gran Tierra said that, with a strong balance sheet and focus on high-quality assets, the acquisition was a significant step in its strategy to increase scale and relevance in the international energy market.

"We are thrilled to announce this acquisition, which marks a significant milestone in diversifying our portfolio while strengthening our asset base," said Gran Tierra president and chief executive officer Gary Guidry.

"By integrating these high-quality, operated assets, including low-decline production, large resources in place and a substantial land base, we are not only enhancing our asset base but also aligning with our long-term strategic vision.

"We are excited to welcome the talented Canadian team to our company, as their expertise and dedication will be invaluable in driving our continued success."

At 0850 BST, shares in i3 Energy were up 26.48% at 12.11p.

Reporting by Josh White for Sharecast.com.