Shares of i3 Energy ITE-T jumped as much as 33.7 per cent on Tuesday morning after Canada’s Gran Tierra Energy GTE-T offered to buy the British oil and gas producer in a deal valued at £174.1-million ($226.23-million).
The deal has an implied valued of 13.92 pence per i3 Energy share, which represents a premium of 49 per cent to the London-listed company’s Aug. 16 closing price.
“This looks to be at a hefty premium to the prevailing I3E price … deal makes sense for GTE as it diversifies the portfolio outside South America and gives it a hefty boost to reserves and production,” said Panmure Liberum analyst Ashley Kelty.
i3 Energy shares were up 26.27 per cent at 12.16p at 0804 GMT.
With the deal, Gran Tierra Energy aims to create an independent energy company of scale in the Americas, with increased production, reserves, cash flows, and development options across Canada, Colombia, and Ecuador.
The combined entity would have about 1.4 million net acres in Colombia, 138 thousand net acres in Ecuador and 584 thousand net acres in Canada.
Once the deal is completed, i3 Energy shareholders are expected to own up to 16.5 per cent of the combined company and its shares will be cancelled from trading on the AIM market of the London Stock Exchange and delisted from the Toronto Stock Exchange.
The offer also contains a “mix and match” facility that will allow i3 Energy shareholders vary the proportions in which they receive cash and new Gran Tierra shares.