Glencore Xstrata to take over Caracal Energy for 800m pounds - UPDATE

14th Apr 2014 13:25

Commodities trader and resources group Glencore Xstrata is to buy Chad-focused oil and gas explorer Caracal Energy for around 800m pounds in cash, sending shares in the latter soaring on Monday.As part of the agreement, Canada-based Caracal has pulled out of its proposed merger with TransGlobe Energy given that Glencore's offer "constitutes a superior proposal".Glencore is to pay 550p per share for Caracal, representing a 61% premium to its 342p closing price on Friday.Accordingly, Caracal's stock was up 58.5% at 542p by 13:45 in London."Both companies have had a successful partnership since 2012. This transaction deepens our relationship, adding further value and expertise to our growing oil business in Africa," said Glencore's Head of Oil, Alex Beard. "We believe the combined business will be even better placed to take advantage of the long-term opportunities across the African oil sector."Glencore also announced on Monday that it had sold its Las Bambas copper project in Peru for $5.85bn to a consortium of investors, including a subsidiary of state-owned China Minmetals, after months of negotiations.Analyst Alessandro Pozzi from Barclays labelled Glencore's offer as "light but welcome"."Although the 61% premium implied by Glencore's £5.50/share bid does not fully reflect the value of Caracal's acreage in Chad in our view, we believe it is likely to be welcomed by most investors in light of its recent share price underperformance."Furthermore, he said that if shareholders don't vote through the takeover, the "unpopular merger with TransGlobe may be pursued again".BC