In an effort to boost its North Sea oil output, Ithaca Energy Inc has purchased Valiant Petroleum Plc for GBP203 million or US$308.2 million in cash and stocks. This purchase would allow Ithaca to double its production from its oilfields of the North Sea to between 14,000 to 16,000 barrels of crude oil each day.
As a result of the purchase, Valiant shareholders would receive GBP0.307 per share and 1.33 Ithaca shares for every Valiant share owned. This is a 37% increase in the original share price of Valiant at the close of the London Stock Exchange last Thursday. On the other hand, Ithaca's share value fell ten percent.
Funds to pay for the purchase would come from the existing cash on hand of Ithaca together with a bridge credit facility from Banc of America Securities Ltd, BNP Paribas and the Nova Scotia Bank. It would also utilize a US$500 million in tax allowances from tax breaks granted by the UK government to spur output from the North Sea.
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