Lion Energy Corp said fellow Canadian oil and gas explorer and partner Africa Oil Corp intends to buy it for about C$40.3 million in an all-stock deal to expand their operations in east Africa.
Lion Energy, which focuses on oil and gas in east and central Africa, said each of its share will be exchanged for 0.2 shares of Africa Oil. The offer of 40.2 Canadian cents represents a 28 percent premium to Lion Energy’s Monday closing price.
Lion Energy has 100.1 million shares, including options and warrants.
The company, which was earlier Raytec Metals Corp, is a joint venture partner of Africa Oil in Kenya and Somalia.
Africa Oil and its partners hold exploration licences in Somalia’s semi-autonomous Puntland region. The company is also exploring for oil in Kenya and Ethiopia.
Lion Energy has entered into lock-up agreements with certain shareholders who hold 29.23 percent of its outstanding shares.
The company also has cash, cash receivables and tradable securities which have an aggregate value of about C$30.4 million.
Haywood Securities Inc is Lion Energy’s financial adviser.
Africa to swallow Lion
Canadian player Africa Oil is to acquire Lion Energy, its joint venture partner on East African acreage, in a shares transaction.
Lion currently partners Africa Oil on four blocks in Kenya and the autonomous state of Puntland in Somalia. The Vancouver-based company is also active in Ethiopia.
Under a letter of intent between the two companies, Africa Oil is proposing to exchange each share of Lion for 0.2 of its own shares.
In addition to Lion’s interests in these blocks, Africa Oil will also acquire cash and receivables amounting to $30.3 million.
The companies aim to enter into a definitive agreement for the takeover transaction by 25 March.
“The acquisition of Lion consolidates our interest in the East African rift basins in Kenya and Puntland. The cash portion of the deal will further strengthen our balance sheet to allow us to fully fund the upcoming aggressive exploration drilling campaign,” said Africa Oil chief executive Keith Hill.