Shares in Salamander Energy (LSE: SMDR) were up 2% in early trading after Ophir Energy (LSE: OPHR) proposed a 0.5719 share exchange to merge the two companies.
The offer comes only three days after CEPSA pulled out of a deal worth up to 145p per Salamander share, sending the company into a freefall that saw its market cap lose 25%.
Ophir’s proposed share exchange, which is currently worth 100p per Salamander share, falls well short of Cepsa’s offer and only represents a 23.5% premium to Salamander’s share price on 24 October, the last business day prior to the conditional proposal announcement.
This premium is well below the initial offer of 44.5%, due to a decline in Ophir’s share price.
The board of Salamander expects to recommend the proposed offer due to the “compelling strategic logic” behind the combination of the two businesses.
Management believe the resultant strong balance sheet, enhanced operating capability across Africa and South East Asia and deep expertise would “substantially benefit the shareholders of both companies”.
After the combination, Ophir would remain an exploration-led upstream company.
