Chad-Cameroon: Glencore buys Caracal, trumping TransGlobal deal

Minerals giant Glencore Xstrata has agreed to buy its Chad partner Caracal Energy for £5.50/share, valuing the Canadian company at $1.35bn. The deal means Caracal will walk away from a previously agreed merger with Calgary-based TransGlobe Energy Corporation, paying a $9.25m termination fee (AE 274/14). The sale price represents a 61% premium to the £3.42 closing price of Caracal’s shares on 11 April, the last trading day before the announcement. Despite this, the price is widely seen as a good deal for Glencore, representing an internal rate of return of more than 20%. The deal is also good news for Calgary-based United Hydrocarbon International Corporation, which is looking for a partner for its DOC and DOD licences, where it believes it has structures analogous to Kenya’s prolific South Lokichar Basin (AE 274/17).