Celtic Exploration (TSE:CLT) Wednesday received a friendly takeover offer valued at $3.1 billion from U.S. energy giant ExxonMobil (NYSE:XON), which will expand its natural gas holdings in western Canada.
The total price of the ExxonMobil offer through Exxon Mobil Canada includes debt and spending obligations that the buyers would assume.
Celtic’s shareholders are being offered $24.50 per share and a half-share of a new company, provisionally named Spinco – well above recent market prices. Excluding the value of Spinco shares, the bid is at a 25 per cent premium on Celtic's closing price on Tuesday and 34 per cent over a 30-day volume-weighted average price of $18.28 per Celtic share.
Celtic’s stock closed Tuesday at $18.12 in Toronto.
"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," Andrew Barry, president of Exxon Mobil Canada, said in a statement.
Exxon Mobil's acquisition, which includes current production of 72 million cubic feet a day of natural gas and 4,000 barrels a day of crude, condensate and natural gas liquids, comes as foreign companies are looking to bolster their presence in resource-rich Canada.
The Celtic assets being acquired include 545,000 net acres in the liquids-rich Montney shale, 104,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta. Celtic is focused on exploration, development and production of crude oil and natural gas resources primarily in west central Alberta.
Spinco will be a new publicly-listed oil and gas company led by Celtic's current management team. The new company will have about 49,000 acres of undeveloped lands and produce the equivalent of about 3,300 barrels per day, about 90 per cent in the form of gas.
The board of Celtic supports the proposal and has agreed not to seek a better offer but is entitled to consider rival offers brought to it. ExxonMobil Canada will have a right to match any superior proposal.
The deal will require approvals from shareholders and debtholders.
Celtic has agreed to pay a $90 million break fee if the deal with ExxonMobil doesn’t close.
By. Joyanta Acharjee of proactiveinvestors.com