* Ithaca says to buy Valiant for 203 mln pounds
* Expects to double North Sea output forecast for 2013
* Ithaca shares down 10 pct, Valiant up 35 pct
(Adds Ithaca's Toronto listed share movement)
By Karen Rebelo
March 1 Ithaca Energy Inc has
agreed to buy Valiant Petroleum Plc for 203 million
pounds ($308.2 million) in cash and stock, in a deal that will
enable it to double its 2013 production forecast from oilfields
in the North Sea.
Valiant shareholders would receive 307 pence in cash and
1.33 Ithaca shares for each Valiant share, Ithaca said in a
The offer represents a premium of 37 percent to Valiant's
Thursday closing price on the London Stock Exchange. Valiant
shares climbed toward the offer price on Friday, while Ithaca's
stock fell 10 percent.
The deal will be funded by Ithaca's existing cash resources
and a bridge credit facility from Banc of America Securities
Ltd, BNP Paribas and The Bank of Nova Scotia.
Smaller oil producers and explorers in the North Sea are
consolidating in a drive to revive flagging output in British
In a study published in December, the University of Aberdeen
forecast that British oil output from the North Sea would rise
in the next few years, reflecting more investment, high prices
and tax breaks.
Ithaca said the acquisition of Valiant, which focuses on the
UK and Norwegian Continental Shelves, would more than double its
2013 production forecast to 14,000 to 16,000 barrels of oil
equivalent per day.
Ithaca said the deal would help it transform itself into a
leading mid-cap North Sea oil and gas operator, with proven and
probable reserves of about 74 million barrels of oil equivalent.
Ithaca will also gain about $500 million in UK tax
allowances through the deal, under the tax breaks provided by
the British government to boost output from the North Sea.
Ithaca's London-listed shares were down 8 percent at 117.75
pence at 1535 GMT. It's Toronto-listed shares were down 7
percent at C$1.83 on the Toronto Stock Exchange on Friday.
"It is a good strategic fit, perhaps, but it is a big price
to be paying," said Edison Investment Research analyst Ian
He said he expected more mergers between North Sea oil
companies while their share prices were below what the industry
would expect to pay.
Valiant put itself on the block in September.
Its shares rose 35 percent to 469.25 pence on Friday
"For Valiant, the strategic process had been going a long
time. The share price had gone down and down," Canaccord Genuity
analyst Charlie Sharp said. "I guess hope of a happy outcome had
Cenkos Securities Plc advised Ithaca on the deal while
Valiant's board was advised by Morgan Stanley
($1 = 0.6588 British pounds)
(Additional reporting by Ankur Banerjee in Bangalore; Editing
by Don Sebastian and Robin Paxton)