i3 Energy PLC is making headlines with its recent transaction with Gran Tierra Energy Inc., and the CEO, Majid Shafiq, sat down with Proactive Investors to discuss the details of this deal. The acquisition of i3 Energy by Gran Tierra has been recommended by the board of directors and is set to bring significant benefits to shareholders.
The Process of Finding a Buyer:
The process of finding a buyer for i3 Energy began in Q1 2024 when the company received unsolicited approaches from multiple counterparties. After evaluating these offers and considering the company’s standalone options, i3 Energy decided that a transaction was in the best interest of its shareholders to maximize and accelerate value realization. Two independent financial advisors were appointed to manage the sales process, and potential counterparties were granted access to a data room for due diligence.
Gran Tierra emerged as the highest bidder, and after a series of negotiations, they increased their offer multiple times before finalizing the terms. The timeline for completion of the deal is outlined in the Scheme Document published to shareholders, with the expectation that it will occur in Q4 2024. While there is a possibility of a counter-offer, the Gran Tierra offer has been deemed the best option resulting from a thorough sales process.
Strategic Rationale for the Transaction:
The strategic rationale for the transaction with Gran Tierra lies in creating a prominent oil-weighted full-cycle E&P company with top-tier producing assets and exploration portfolios. This merger will accelerate production growth, enhance shareholder value, and provide significant financial capacity. The offer from Gran Tierra represents a premium to the closing price before the announcement, and the board believes it compares favorably to similar company valuations and transactions.
Gran Tierra’s financial resources will be used to accelerate the development of i3 Energy’s key assets, including the Simonette Montney asset. The combined company will have increased scale, financial capacity, and operational synergies, positioning it for growth and success in the oil and gas sector.
Fair Pricing and Shareholder Return Policy:
The board of directors considers the offer from Gran Tierra to be fair and reasonable, offering shareholders an opportunity to realize a cash premium while retaining equity ownership in the combined group. The acquisition expedites the delivery of fair value to shareholders without requiring additional capital investment or operational risk. Gran Tierra’s current shareholder return policy includes growth in share price and share buybacks, with a focus on creating long-term value for investors.
The Q3 dividend is described as part of the ‘Consideration’ to provide additional value to shareholders as an addition to the original offer. Shareholders can look forward to an immediate cash return, shares in Gran Tierra, and exposure to a substantial business with significant reserves and production capacity.
The Future of the Combined Company:
The enlarged company resulting from the merger will have producing oil and gas assets in Canada, Colombia, and Ecuador, with real growth potential and exploration upside. Gran Tierra’s operational track record, combined with i3 Energy’s key assets, will create a robust portfolio with opportunities for development and expansion. Shareholders can expect increased liquidity and access to global capital markets, enhancing the value of their investment.
In conclusion, the acquisition of i3 Energy by Gran Tierra represents a significant opportunity for shareholders to benefit from a strategic merger that will create a stronger and more diversified company in the oil and gas sector. The board’s recommendation, the fair pricing of the transaction, and the potential for future growth and returns make this deal a compelling opportunity for investors.