By Alexis Flynn
LONDON-- Glencore Xstrata PLC snapped up African-focused oil
producer Caracal Energy Inc. on Monday for $1.35 billion in cash,
just hours after selling a Peruvian copper mine for nearly $6
billion and putting paid to a rival deal between Caracal and
Canadian oil company TransGlobe Energy Corp .
The Swiss-based mining and trading giant will acquire
London-listed Caracal in full for around $9.20 a share, according
to a joint statement from the companies. Caracal, whose main assets
are oil fields in the central African nation of Chad, had been on
the verge of merging with TransGlobe Energy.
Glencore's acquisition of Caracal underscores its ambition to
increase its oil market presence, and its willingness to buy assets
in politically risky countries. It will take over Caracal's
operatorship of its Chadian oil fields which are located near giant
fields operated by U.S. firm Exxon Mobil Corp. Although Glencore
has a number of stakes in various West African oil fields, this is
the first producing field that it will manage and control
itself.
Chad, an oil and mineral-rich former French colony in the Sahel
region that cuts between North and sub-Saharan Africa, is
relatively peaceful. But it is situated in a tough
neighborhood--the Central African Republic to its south is
embroiled in a bloody interreligious conflict.
The deal reinforces the ties between Glencore Xstrata and
Caracal, which produced around 25,100 barrels of oil a day last
year. Since 2012, Glencore Xstrata has held a 25% stake in several
of Caracal's Chadian oil fields after agreeing to provide $300
million of financing to the company.
"Both companies have had a successful partnership since 2012.
This transaction deepens our relationship, adding further value and
expertise to our growing oil business in Africa," said Alex Beard,
head of Glencore's oil division.
For Caracal shareholders, the largest of whom is the family
trust of founder Bradley Griffiths, who died in a boat accident in
2011, the all-cash Glencore offer represents a 61% premium to the
value of their shares on Friday.
Caracal Chief Executive Gary Guidry said it represented an
"excellent outcome" for the company's investors.
"Glencore has been an important supporter and partner of Caracal
in Chad and this is a natural progression in the development of
this portfolio," said Mr. Guidry.
The deal will be subject to a Caracal shareholder vote in early
June, though it isn't subject to the approval of the government of
Chad, the companies said.
Write to Alexis Flynn at alexis.flynn@wsj.com
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