TORONTO (CP) -- In a statement released Thursday, Tanganyika announced that it had reached a deal that would see all of its outstanding common shares acquired by Chinese refiner Sinopec International Petroleum Exploration and Production Corporation (SIPC) for $2 billion.
The all-cash transaction, valued at $31.50 per share, represents a significant premium for the company based on recent and historical stock prices, according to the statement.
Tanganyika shares soared last week after the Calgary-based company announced it had entered into sales talks without identifying the third party involved.
On Wednesday, the stock price stood at $26, just 75 cents shy of an all-time high reached in early July and nearly three times the historical low of $9.89 set in January.
Heads of both Sinopec and Tanganyika expressed enthusiasm for the sale in Thursday's statement.
"We believe this transaction is in the best interest of Tanganyika and delivers immediate and significant value to our shareholders," said Gary Guidry, Tanganyika's president and chief executive.
SIPC head Zhou Baixiu said Tanganyika's focus on oil properties in Syria would allow the Chinese company to increase its presence as a global commodities player.
"This transaction is an important component of Sinopec Group's strategy to become a diversified global resource provider," he said. "We believe that our strong technical experience and our local relationships will serve to maximize the underlying value of these very attractive assets, and we are excited about this opportunity.
In the first half of 2008, Tanganyika said its Syrian properties yielded an average of 16,670 barrels of oil per day.
The sale, which has been unanimously approved by Tanganyika's board, is still subject to shareholder approval.
Sinopec has agreed to pay Tanganyika a fee of $65 million if Chinese regulatory processes have not been completed by Dec. 24, and Tanganyika has committed to an equal sum as a termination payment.
Tanganyika joins the ranks of other middle-east-focused Canadian oil firms that have recently passed into foreign ownership.
Earlier this month, Italian oil giant Eni struck a $923-million deal to acquire First Calgary Petroleums (TSX:FCP), a Calgary company that has been trying to develop a major natural gas field in Algeria. First Calgary had been under pressure from shareholders to find a buyer. Nearly two years ago, Centurion Energy International, a former Calgary natural gas producer active in Egypt, was sold to Dana Gas PJSC of the United Arab Emirates for $1.25 billion.
© Canadian Press
