United Energy Group acquires Kuwait Energy in $651 million deal
Hong Kong-listed energy firm United Energy Group has made a $651 million bid to acquire Kuwait Energy, United Energy said in a filing to the Hong Kong stock exchange, Reuters reports.
Egypt assets among those that enticed United: The move comes as United Energy looks to expand in the Middle East. Kuwait Energy has operations in several countries, including Egypt, Iraq, Yemen and Oman, United Energy said.
Background: Reports of the acquisition come two months after Kuwait Energy reportedly hired investment bank Perella Weinberg Partners to advise on possibly divesting its stakes in Egypt and Iraq. Talks for a possible merger with the UK’s SOCO International earlier this year had reportedly had fallen apart. The firm, which lost its CEO and saw a credit downgrade last year, owes $290 million due next year, and should start repayments of a convertible loan of around $150 million this year to an entity controlled by private equity group Abraaj. SOCO said last week it would acquire Egypt-focused oil driller Merlon.
United Energy Group acquires Kuwait Energy for up to US$651 million
United Energy Group (UEG) has announced that UEG will acquire the entire issued share capital of Kuwait Energy (KE) by way of a Scheme of Arrangement for a cash consideration of up to US$651 million.
The Acquisition will transform the Company into a strong medium-sized international independent oil and gas company, with a diversified portfolio of high quality assets. The production base and long reserve life of KE are highly complementary to the Company’s existing portfolio and provides a sustainable development profile to the Company for the next two decades. The Company will also leverage its strong financial capabilities to enhance the development potential of KE’s portfolio. The Acquisition will significantly improve the profile of the Company and also further expand its development potential.
Established in 2005, KE has built a high-quality, diversified portfolio of oil and gas assets. It conducts exploration, appraisal, development and production activities in a number of countries including Iraq, Egypt, Yemen and Oman.
Kuwait Energy plc (“KE” or “the Company”) Announces Agreement with United Energy Group Limited (“UEG”) for the Sale of its Entire Issued Share Capital
Kuwait Energy plc (“KE”) is pleased to announce that they have reached agreement with United Energy Group (“UEG”) Limited on the terms of an all cash acquisition (“the Acquisition”) of the entire issued share capital of KE by UEG.
Under the terms of the Acquisition, the consideration comprises approximately US$491 million for the current issued share capital of KE on a fully diluted basis, which is anticipated to equate to approximately US$1.50 per share. The consideration is subject to adjustment in certain circumstances and so the price per share paid at completion may be less or more than the anticipated price.
- The agreement has received the unanimous approval of the Board of Directors of KE who have been fully supported by the Company’s management team;
- UEG will bring considerable new investment and operational execution expertise to KE’s assets in Iraq and Egypt;
- KE’s corporate and technical headquarters will remain based in Kuwait, with operational subsidiaries in Cairo, Egypt and Basra, Iraq; and
- The equity consideration of approximately US$491 million plus the assumption of the Company’s outstanding debt.
The Board of KE, which has been advised by Tudor Pickering Holt & Co. (“TPH” a trading name of Perella Weinberg Partners UK LLP) as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable. In providing its advice to the Board of KE, TPH has taken into account the commercial assessments of the Board of KE.
It is intended that the Acquisition will be implemented by way of a court sanctioned scheme of arrangement further details of which will be announced on the company’s website. The Board of Directors intend to unanimously recommend that KE shareholders vote in favour of the scheme at the court meeting and the resolutions to be proposed at the shareholder general meeting. The Chairman and CEO who hold KE shares have irrevocably undertaken to vote in favour of the scheme at the court meeting and the resolutions to be proposed at the shareholder general meeting.
Dr. Mansour Aboukhamseen Chairman of KE commented:
“I am pleased to report the recommended transaction recognises the significant value of our Company’s portfolio and will provide value and liquidity to all shareholders. This transaction will provide the necessary financial resources to accelerate the development of the asset base. UEG’s future stewardship of KE’s portfolio will generate substantial benefits for our stakeholders in Iraq and Egypt and in particular the local communities in which the Company operates”.
UEG is a Hong Kong based leading independent Exploration and Production company listed on the main board of the Hong Kong Stock Exchange and has a market cap of HK$39.95 billion as at the close of the Hong Kong stock market on 21 Sept 2018 (approx. US$5.12 billion). UEG operates through locations in China, Hong Kong and Pakistan with an average daily net production of approximately 62 kboepd at half-year 2018 and audited year-end 2017 1P reserves of 96.4 mmboe.
It is UEG’s intention to continue operating all of KE’s subsidiary companies with KE’s current management and employees.