RAK Petroleum is to merge its oil and gas operating companies into DNO International (DNO) following completion of due diligence and agreement.

RAK Petroleum will receive 153 million shares of DNO of which 9.5 million will be in treasury shares and the remaining 143.9 million new shares to be issued through an increase of DNO’s share capital.

The company’s stake in DNO on completion of the merger will increase to 40% from its present share of 30%.

The transaction values DNO at $1.64bn and RAK Petroleum’s subsidiaries at $250m.

The deal is expected to close later this year and is subject to regulatory approvals.