LONDON, UK — Following the announcement by Kistos Plc on July 12, the board of Serica Energy Plc confirms that on May 24 it received a non-binding proposal from Kistos regarding a possible cash and share offer for the entire issued and to be issued share capital of Serica. Following careful consideration, the Serica board, together with its financial advisers, unanimously rejected the Kistos possible offer on June 1 on the basis that the board strongly believed it significantly undervalued Serica and its prospects and was not in the best interests of shareholders or other stakeholders.
In response to this initial approach from Kistos and recognizing the industrial logic of a combination implemented through an appropriate structure, Serica made a non-binding indicative cash and share offer for the entire issued and to be issued share capital of Kistos on July 1. On July 8, the Serica possible offer was rejected by the Kistos board.
In rejecting the Kistos possible offer and formulating the Serica possible offer, the Serica board has taken the following factors into account and believes:
1. Serica's management has an outstanding track record of financial and operational delivery
2. The Kistos possible offer materially undervalues Serica and would negatively impact the combined entity's balance sheet and growth potential; and
3. The Serica possible offer would secure for both sets of shareholders the advantages of scale and diversity attained from combining the asset portfolios.
Serica sees merits in the combination of the two companies on the terms of the Serica possible offer:
- Scale and diversity: gas-focused North Sea business with pro-forma 2P reserves of approximately 86 MMboe and estimated pro-forma 2022 production of approximately 40,000 boe/d;
- Financially resilient: resources to execute an ongoing and impactful organic development and exploration investment program through the upstream cycle; and
- Strong platform for further acquisitions: significant capacity for future acquisitions and corporate combinations.
The Serica board continues to proactively pursue multiple growth options and will only proceed with any of them on appropriate terms. The board will not recommend any deal on terms which it believes are unattractive to its shareholders and wider stakeholders. Serica shareholders are strongly advised not to take any action.