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Peyto chairman Don Gray says Open Range Energy is ‘the perfect fit for our company.’

Larry MacDougall

Peyto Exploration and Development Corp. has raised its all-stock takeover offer for Open Range Energy Corp. to fend off a rival bid.

When Calgary-based Peyto announced its initial offer in early July, it was worth about $1.34 per share.

On Tuesday, Peyto announced it plans to swap 0.0723 of one of its shares for each Open Range one, up from an earlier exchange ratio of 0.0696.

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Based on Peyto's current share price of $21.29 around mid-day Tuesday, that makes the offer for Open Range worth about $1.54 per share.

The new deal is worth $115-million, plus the assumption of $69.5-million in Open Range debt and $10-million in transaction costs announced earlier.

Open Range shares rose more than 6 per cent to $1.54 on the TSX.

"The increase in the consideration resulted from Open Range having received an unsolicited proposal from a third party," Peyto said in a statement.

Open Range must now also pay a fee of $8.5-million to Peyto if the deal doesn't close, up from the earlier non-completion fee of $5-million.

"The team at Open Range has built a very impressive asset over the years. In our 13-year corporate history we have not come across another company that has fit so well with our build-it-yourself model," said Peyto chairman Don Gray.

Mr. Gray said Open Range is Peyto's immediate neighbour in the Sundance area of Alberta's natural gas-rich Deep Basin area.

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"We are very confident that our expertise in this area and the obvious geographical synergies between our assets make the combination of Peyto and Open Range the perfect fit."

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