Gran Tierra Energy Inc on Tuesday announced agreement to buy i3 Energy PLC, a Westhill, Scotland-based oil and gas company with assets in the UK and Canada.

Gran Tierra, an oil and gas exploration and production company focused on the acquisition and development of energy assets in South America, said the cash and shares offer implied an equity value of £174.1 million for i3 Energy.

‘The acquisition will create a more diverse international energy company operating across the Americas in regions with substantial oil and gas production, well-established regulatory regimes, stable contracts, access to markets and attractive fiscal terms. The combined group will offer a more diversified proposition to both i3 Energy shareholders and Gran Tierra shareholders,’ Gran Tierra said.

Under the terms of the acquisition, each i3 Energy shareholder will be entitled to receive one New Gran Tierra share per every 207 i3 Energy shares held, plus 10.43 pence cash per i3 Energy share.

In addition, each i3 Energy shareholder will be entitled to receive a cash dividend of 0.2565 pence per i3 Energy Share in lieu of the ordinary dividend in respect of the three month period ending September 30.

The acquisition implies a value of 13.92 pence per i3 Energy share and approximately £174.1 million for the total share capital of i3, whose shares had closed at 9.63p each on Monday, giving it a market capitalisation of £115.8 million.

i3 Energy shares jumped 26% to 12.11p each on Tuesday morning in London, giving it a market capitalisation of £145.8 million.

Gran Tierra shares were down 4.3% at 665.00p each on Tuesday morning in London. In after hours trading in New York on Monday, Gran Tierra shares had rise 5.3% to $8.98 each.

Gran Tierra said it expects takeover of i3 Energy to become effective in the final quarter of the year.

Gran Tierra said i3 Energy directors consider terms of acquisition ‘fair and reasonable.’

i3 Chief Executive Officer Majid Shafiq said: ‘We believe that the acquisition presents an exceptional opportunity for i3 Energy’s shareholders. The acquisition represents the culmination of a thorough process to realise the maximum value available for shareholders and offers significant upside potential; it expedites the realisation of fair value, with a cash premium and incremental upside through continued ownership in the combined group, without necessitating additional capital investment, time, or operational risk.

‘This business combination will significantly enhance scale, thereby improving capacity to drive growth, production, and cash flows for the benefit of all shareholders and local stakeholders.’

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