Ophir Energy Plc Acquires Salamander Energy Plc

Ophir Energy Plc (LON:OPHR) says that the purchase of Salamander Energy Plc (LON:SMDR) will “substantially benefit” shareholders of both companies.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ophir Energy (LSE: OPHR) — an upstream oil and gas exploration company — this morning announced that agreement has been reached for the acquisition of the South East Asia-focused independent exploration and production company Salamander Energy (LSE: SMDR).  

Ophir’s share price is currently down just over 1%, to 168p.

The boards of the two companies say there is “compelling strategic logic” for the two businesses to combine that will “substantially benefit” both sets of shareholders. The enlarged Ophir will, the company says, be able to exploit diversified funding sources, which will significantly enhance the long-term sustainability of the combined business.

Ophir also says that the purchase of Salamander will enhance its operating capability in both Africa and South East Asia, and that the combined company will gives its shareholders exposure to 21 production, development and exploration blocks in South East Asia, in addition to Ophir’s extensive activities in Africa.  

Under the terms of the transaction, Salamander shareholders will get 0.5719 new Ophir shares for each Salamander share they hold, and they will own approximately 20.9% of Ophir.  That represents an indicative value of 115.9p for each share in Salamander — a 44.5% premium on its closing share price on 24 October, which was the last business day before  the offer period started. 

Commenting on the acquisition, Ophir’s non-executive chairman, Nicholas Smith, said:

Combining Ophir and Salamander will create a balanced African and South East Asian operating platform, designed to deliver Ophir’s exploration-led strategy across both regions. We see many value creating opportunities in both Africa and South East Asia that can be swiftly accessed by leveraging Ophir’s exploration expertise with Salamander’s operational strength. Furthermore, Salamander’s anticipated growing production will allow Ophir to diversify its funding sources, and to continue to monetise assets for the benefit of shareholders.

Ophir’s shareholders will certainly be hoping that the acquisition will benefit them — Ophir’s share price is down 52% on this time last year, compared with a 1.3% gain by the FTSE 250 index.  And the longer-term story is much the same,  with Ophir having fallen 33% over the past five years, whilst the FTSE 250 has risen 13%.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »