US-based Vaalco Energy has signed a definitive agreement to acquire Canadian oil and gas explorer TransGlobe Energy in an all-stock deal valued at $307m.
Under the terms of the agreement, Vaalco will buy each TransGlobe share for 0.6727 of a Vaalco share of common stock.
The business combination, which has been approved by the boards of directors of both companies, is expected to close in the second half of this year.
Its closing is subject to approval by the stockholders of both Vaalco and TransGlobe, and other customary closing conditions and approvals.
Upon closing of the merger, the Vaalco stockholders will have around 54.5% stake and TransGlobe shareholders own about 45.5% stake in the combined company.
Vaalco chief executive officer George Maxwell said: “Vaalco and TransGlobe share similar corporate cultures with firm commitments to financial discipline, stockholder value, operational excellence and positive ESG impact.
“As such, we believe this transaction is mutually beneficial for the broader stakeholders of both companies and reinforces the ability of the combined company to deliver on those commitments.
“We look forward to engaging with both sets of equity holders as we re-emphasize the mutually beneficial nature of the proposed transaction and the vision for the stronger combined company.”
The business combination is expected to create a large-scale Africa-focused E&P company that supports sustainable growth, along with returns and benefits to stakeholders.
The combined company will have a full-cycle portfolio of low-risk, high-return assets located in established basins in Egypt, Gabon, Equatorial Guinea and Canada.
It will have $53m in net cash, as of 31 March 2022, along with operational free cash flows to enable sustainable stockholder returns and growth while maintaining sufficient liquidity.
Vaalco CEO George Maxwell and CFO Ron Bain will continue in positions, while TransGlobe’s executive team will be moved to the combined entity in three to six months.
Stifel, Nicolaus & Company served as a sole financial advisor, Mayer Brown International, Osler, Hoskin & Harcourt, and Al Kamel Law Firm as legal counsel to Vaalco on the transaction.
Evercore Partners International served as a sole financial advisor, while Burnet, Duckworth & Palmer, Paul, Weiss, Rifkind, Wharton & Garrison, Bird & Bird and Sharkawy & Sarhan as legal counsel to TransGlobe.
TransGlobe president and chief executive officer Randy Neely said: “We are very pleased to bring together two leading international oil and gas companies, each with decades of operational excellence in Africa.
“Under the stewardship of a joint Vaalco and TransGlobe board, we are confident that the assets of Vaalco and TransGlobe will continue to provide strong shareholder returns.
“The additional scope and scale of the combined entity will provide a larger platform, which will provide greater stability to TransGlobe’s practice of distributing cash to shareholders as well as growth investment in TransGlobe’s operations in Egypt and Canada.”
