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August 10, 2022

Kistos and Serica Energy call off merger talks

Kistos now plans to "pursue other paths" to become an independent gas champion in the North Sea.

Energy investment firm Kistos has abandoned merger talks with British oil and gas group Serica Energy after they failed to agree on a revised proposal.

In its statement, Kistos said: “Despite repeated attempts by Kistos, the Board of Serica Energy plc has failed to engage meaningfully either with respect to Kistos’ proposed offer for Serica or the terms of Serica’s offer for Kistos despite the board of directors of both companies acknowledging the industrial logic in combining the portfolios of the two companies.

“As a result, Kistos today formally announces that it will not make a firm offer for Serica.”

Last month, Serica rejected cash and shares merger proposal by Kistos that valued the British firm at £1.04bn ($1.23bn). 

The offer included $4.54 (£3.82) per share in cash and equity, representing a 25% increase over Serica’s closing price on 11 July 2022.

Kistos’ proposal included 0.2932 new Kistos shares and $2.92 (£2.46) in cash for shareholders of Serica for each share held in the company.

Later, Serica counter-offered a proposal of $1.07 (£0.9) per share and 1.29 new Serica shares for each Kistos share.

However, Kistos too rejected this offer and said the price was “at the wrong price, with the wrong mix of stock and cash”.

Kistos noted that it is planning to “pursue other paths” to become an independent gas champion in the North Sea and ‘proactive consolidator in the sector’.

Kistos owns a 20% share in TotalEnergies’ offshore fields in the West of Shetland, and assets in the Dutch North Sea.

Serica too confirmed that it would not make further offers to acquire Kistos.

The British firm said: “Serica will continue to proactively seek opportunities to utilise its strong balance sheet and operating capability to invest in its existing assets and diversify its production portfolio through mergers and acquisitions.

“The Serica board will maintain a balanced approach to deploying capital, including further capital returns, while factoring in the requirements for the ongoing business and opportunities for profitable asset and corporate deals.”

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