(Reuters) – Indonesian oil and gas group Medco said on Wednesday it will buy Ophir Energy Plc for a sweetened bid of 390.6 million pounds in cash, as it looks to strengthen its portfolio of assets in Southeast Asia.
Ophir’s shares were expected to rise as much as 10 percent, according to a premarket indicator.
The deal comes after Ophir rejected Medco’s $437 million, or 48.5 pence per share, potential buyout offer earlier this month, saying it undervalued the company.
The company’s current output of 25,000 barrels per day (bpd) of oil equivalent combined with Medco’s stated 2018 target of 85,000 bpd of oil equivalent would make Medco the seventh largest non-national upstream oil producer in Southeast Asia, according to research firm WoodMac.
Wednesday’s offer of 55 pence per Ophir share represents a 65.7 percent premium to Ophir’s closing price on Dec. 28, the last trading day before Medco first announced a possible offer for the London-listed company.
Ophir’s shares lost almost half their value last year as it failed to find financing for a liquefied natural gas project in Africa’s Equatorial Guinea and led to losing its licence for the project, prompting warnings of a $300 million write-down for the full year.
Ophir plans to recommend that shareholders vote in favour of the deal, which it considers “fair and reasonable”.
The cash consideration of the deal will be funded from existing cash resources of Medco and Medco Global and from proceeds of a credit agreement, the companies said in a joint statement.
(Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta)