Norwegian oil and gas operator DNO has offered to pay $300 million for Kurdistan-focused oil play Gulf Keystone Petroleum (GKP) in a cash and shares deal.
Investors bid up the shares by 18.5% to 4.6p on the news which comes a fortnight after the target negotiated a debt restructuring with creditors.
DNO says its offer is priced at a 20% premium to the level at which Gulf Keystone plans to issue further shares in its restructuring.
It says the terms for guaranteed noteholders reflect 111% of par value compared to 99% under the previously proposed restructuring. Convertible bondholders would get 18% of par value versus 15% under the contemplated restructuring.
Its offer of an additional 170 million shares will provide Gulf Keystone investors with continued exposure to the Shaikan field.
DNO executive chairman Bijan Mossavar-Rahmani comments: ‘Combining these two companies will create further scale and unlock operational synergies that will reinforce DNO's already formidable presence in Kurdistan.’
Gulf Keystone is currently valued at just under £50 million, a far cry from its previous days as a multi-billion pound company.
Its downfall has been attributed to a lack of money and investors challenging executives over high pay, while production targets were not being met.
‘The Board of Gulf Keystone is currently reviewing (DNO’s) proposal and will update the market on its response in due course,’ says the company in response to this morning’s takeover approach.
Genel Energy (GENL) had previously been mooted as a possible bidder for Gulf Keystone.
US asset manager Capital Group has recently been building up a stake in Gulf Keystone, holding 12% of the business as of 21 July.