Shell Exploration and Production (Shell Bidco) has reached an agreement with AIM-listed oil and gas group Cove Energy on the terms of a recommended cash offer of 220p per Cove share, up from the proposed offer of 195p per share back in February.
Shell Bidco, a wholly-owned subsidiary of oil giant Royal Dutch Shell, says that the offer values east Africa-focused Cove at £1,120m and represents a premium of 134% to the closing price of 94p as of December 12th, the day before Cove put itself up for sale.
"Shell's decision to announce a recommended Offer for Cove fits with Shell's strategic aim to drive forward with its investment programme to deliver sustainable and profitable growth," Shell said in a statement.
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"The proposed acquisition of Cove's portfolio would mark Shell's entry into exciting new hydrocarbon provinces, in Mozambique and Kenya, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa"
The offer is conditional upon the written consent of the Republic of Mozambique's Minister of Mineral Resources (or through one or more delegated representatives).
"The Board believes that the recommended cash offer from Shell Bidco provides very significant value to Cove shareholders. The proposed transaction is in line with the company's long term strategy, as set out in May 2009, of delivering value to shareholders through exploration and appraisal," said Cove's Executive Chairman Michael Blaha.
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