Vaalco Energy Inc and TransGlobe Energy Corp on Thursday announced their plan for an all-share merger, with the aim to build a leading Africa-focused exploration and production company.
Vaalco is based in Houston, Texas, while TransGlobe is located in Calgary, Alberta. Between them, they hold assets in Egypt, Gabon, Equatorial Guinea and Canada.
TransGlobe shares surged 20% to 316.00 pence, while Vaalco Energy shares fell 2.8% to 505.80 pence each in London on Thursday afternoon.
Vaalco will buy each TransGlobe share for 0.6727 of a Vaalco share. At Vaalco’s current price, that values each TransGlobe share at 340.25p.
The deal values TransGlobe’s equity at $307 million and gives it an enterprise value of $273 million when subtracting $37 million in cash held and adding $3 million in debt.
Vaalco shareholders will hold about 54.5% of the combined company, with shareholders of TransGlobe owning the remaining 45.5%.
Vaalco Chief Executive Officer George Maxwell will lead the new company, and Vaalco Chief Financial Officer Ron Bain will be the CFO of the new firm. TransGlobe executives will leave the company after three to six months.
‘The combination of Vaalco and TransGlobe will create a world-class African-focused exploration and production company supporting sustainable growth and stockholder returns,’ said Vaalco.
Vaalco will continue to be listed on the New York Stock Exchange and the standard segment of the London Stock Exchange.
The planned merger requires several regulatory approvals, from shareholders of both companies and from the Court of Queen’s Bench of Alberta.
The transaction is expected to close in the second half of 2022, the companies said.
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