Serica Energy (AIM:SQZ) has agreed a recommended cash acquisition of Pharos Energy, trumping a rival offer from Ratio and prompting Pharos to withdraw its recommendation of that deal.
Pharos shareholders will now receive 28.6683p in cash per share plus a 4.0p special dividend, taking the total to 32.6683p, or 33.6p including the previously announced FY25 final dividend.
That values Pharos' entire issued share capital at approximately £145.7 million, a 28.6% premium to the undisturbed 25.4p closing price on 23 June and a 20% increase on Ratio's 28p total offer value.
Pharos, which produces oil and gas in Vietnam and Egypt, brings established cash-generative production, a debt-free balance sheet with around $45 million of cash at 30 June, and drill-ready growth options including infill drilling at TGT and CNV and exploration acreage at Blocks 125 & 126.
Serica said the deal is expected to be immediately accretive per share across key metrics, lifting pro forma 2P reserves 13% to 156.8 million barrels of oil equivalent and pro forma 2C resources 15% to 129.4 million barrels of oil equivalent, with 2026 exit production of around 70,000 barrels of oil equivalent per day.
"The acquisition of Pharos is a compelling opportunity to deliver a first step in our long-standing strategic objective of adding to the diversification of our business through international expansion," said Serica chief executive Chris Cox.
Aberforth Partners, holding approximately 14.26% of Pharos shares, has given an irrevocable undertaking to back the scheme.
The acquisition is conditional on regulatory clearances in Vietnam and Egypt, which Serica has flagged as fundamental to completion, alongside shareholder and court approval, with completion expected in the first half of 2027.
News Intelligence what this means for the company
Serica Energy has won a bidding war for Pharos Energy with a 32.6683p-per-share offer (£145.7m total), beating Ratio's 28p bid by 20% and securing a debt-free, cash-generative producer in Vietnam and Egypt. The deal lifts Serica's pro forma 2P reserves 13% to 156.8 million boe and targets 70,000 boepd by 2026, directly executing the international diversification strategy Serica has long pursued; completion is expected in H1 2027, subject to Vietnam and Egypt regulatory clearance.
The acquisition materially expands Serica's reserve base and production footprint outside the North Sea, reducing single-region concentration risk and adding immediately accretive per-share metrics. Execution risk centres on Vietnam and Egypt regulatory approval and integration, with a 12+ month completion window; the deal's financing structure and impact on Serica's stated 15–30% free cash flow return policy remain unaddressed in the announcement.
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