Vermilion Energy acquires Spartan Energy Corp. for $1.4 billion

vermilion energy
Vermilion Energy production by country

Vermilion Energy operates in eight countries with majority of production in Canada

Vermilion Energy Inc. announced that it has entered into an arrangement agreement to acquire Spartan Energy Corp., a publicly traded southeast Saskatchewan oil and gas producer, with annual production of approximately 23,000 boe/d (91% oil), according to the press release.

Total consideration for Spartan is approximately $1.40 billion, comprised of $1.23 billion in Vermilion shares plus the assumption of approximately $175 million in debt.

 Vermilion Energy is a Calgary, AB based company with operations in eight countries across Europe, North America and Australia. Vermilion is targeting production of between 75,000 – 77,500 boe/d in 2018.

Under the terms of the Arrangement, Vermilion has agreed to acquire all of the common shares of Spartan issued and outstanding at the effective time of the arrangement. Spartan shareholders will receive 0.1476 of a Vermilion share for each Spartan common share.

Based on Vermilion’s closing price of $44.04 on April 13, 2018, the exchange ratio translates to $6.50 per Spartan common share, representing a 5% premium to Spartan’s closing price. Vermilion has a monthly dividend of $0.215 per share.

All of the officers and directors of Spartan have entered into voting support agreements and agreed to vote their Spartan shares in favour of the arrangement.  The acquisition includes a reciprocal break fee of $40 million.

The Board of Directors of Vermilion and Spartan have unanimously approved the arrangement and recommended that Spartan shareholders vote in favour of the arrangement.

The arrangement remains subject to customary closing conditions, including receipt of applicable court, Spartan shareholder, TSX and NYSE, and other regulatory approvals, and is expected to close on or about June 15.

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