Calgary-based Petroamerica is acquiring Suroco Energy in an all-stock deal.Chris Bolin/The Globe and Mail
Petroamerica Oil Corp. on Monday announced an all-share deal with Suroco Energy Inc. Petroamerica will swap each Suroco share for 1.7627 of its own, with the exchange ratio representing a 36.4-per-cent premium over the last day Suroco shares changed hands.
Based on Calgary-based Petroamerica's last closing price of about 33 cents, each Suroco share is worth about 57 cents, up from 42 cents on April 22. The stock was halted that day, at the request of the company and pending news, according to a press release issued by Investment Industry Regulatory Organization of Canada. In the week prior to the halt, the stock rallied 40 per cent.
Asked whether the takeover news may have leaked, one of the advisers on the deal said it is "tough to speculate."
"All of the Colombian stocks had started to move up and, really, the only two that hadn't were Petroamerica and Suroco," Sonny Mottahed of Black Spruce Merchant Capital said. Both companies hold assets in the South American country.
"But I think as a preventative measure, thinking that maybe there was something like that in the marketplace, the board and management of Suroco took the initiative to place the stock on halt," he said.
"We hate to think that there could have been because [they were] such a tight group, but it is easy to speculate that could have been the case," Mr. Mottahed said. "When you're in the process of trying to do a transaction, you don't want to leave shareholders in the wings even if they are bidding it up too high."
He added: "What's for sure is both stocks kind of lagged the run that the other producing group had had," he said. "You could say they may have been due for a bit of a run."
Mr. Mottahed cited Canacol Energy Ltd. as an example. It climbed 16 per cent between March 21 and April 22. The company is Calgary-based and has development assets in Colombia and Ecuador.
Petroamerica will have a market capitalization of about $270-million, based on its closing price on Friday, if the Suroco deal is completed.
Black Spruce acted as the sole financial adviser to Petroamaerica. GMP Securities LP and Canaccord Genuity Corp. provided strategic advice to the arrangement. GMP also provided a verbal fairness opinion to Petroamerica's board.
Peters & Co. Ltd. provided advice to Suroco.
Petroamerica shareholders do not have to approve the deal, but two-thirds of Suroco's investors must give it the nod. Both companies trade on the Toronto Venture exchange.
Carrie Tait