NEW YORK (The Deal) -- Britain's Heritage Oil on Wednesday agreed to a 924 million pounds ($1.55 billion) cash takeover by Al Mirqab Capital, an investment vehicle owned by Qatar's former prime minister and foreign minister.
Al Mirqab will offer 320 pence per Heritage share, a 25.2% premium to its Tuesday closing price, to gain access to Heritage's Nigerian oil assets, which contributed the bulk of its $100 million of profit in 2013.
The deal provides an exit for Heritage's long-suffering shareholders, who had witnessed the oil producer's shares slip from a high of 585 pence in 2009 amid disappointing oil output from its stake in the OML 30 block in Nigeria and fears that its exploration assets in Tanzania, Papua New Guinea, Malta, Libya and Pakistan would fail to provide significant new reserves.
"The offer represents an attractive and certain value for Heritage shareholders, having considered the risks, rewards and timescales associated with the realization of value from Heritage's portfolio of assets," Heritage chairman Michael Hibberd said in a statement.
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Al Mirqab is the private investment vehicle of Sheikh Hamad Bin Jassim Bin Jabor Al Thani and his family. HBJ, as the sheikh is known, was the chief executive of Qatar's main sovereign investment fund, Qatar Investment Authority, until last year.
The offer has the support of Anthony Buckingham, Heritage's founder and largest shareholder, with 34% of the company. Under the deal terms, Buckingham will be allowed to sell 14% of Heritage and will have to retain his remaining stake and act as an adviser to Heritage for at least five years.
Heritage paid $850 million in 2012 for a 45% stake in OML 30 from Royal Dutch Shell (RDS.A - Get Report), Total (TOT - Get Report) and the government of Nigeria. It had expected the output from the lease and a smaller Russian asset to provide about 11,350 barrels of oil per day, but results have fallen well short of that. The company said on Wednesday that output for 2013 was 9,496 barrels per day, though it predicted that to rise to between 14,500 and 18,000 barrels per day in 2014.
The deal requires the support of the holders of at least 75% of Heritage's shares, excluding Buckingham, who is unable to vote his shares because of his agreements with Al Mirqab.
Al Mirqab is taking financial advice from Deutsche Bank AG's Cathal Deasy, Charles Wilkinson and Chris Raff and from QInvest LLC's Caspar Warre. Heritage is taking financial advice from JPMorgan Cazenove Ltd.'s Barry Weir, James Taylor, James Robinson and Jamie Riddell.
Heritage shares traded Wednesday at 313.33 pence, up 57.73 pence, or 22.6% on their Tuesday close.