Glencore beats off rival bid to snap up Chad energy explorer

JOHANNESBURG (miningweekly.com) – London-, Hong Kong- and Johannesburg-listed diversified mining and marketing company GlencoreXstrata has beaten off a rival bid to snap up oil-and-gas exploration company Caracal Energy, which is active in the landlocked Republic of Chad in Central Africa.

Glencore’s all-cash offer has been accepted by Caracal Energy, whose CE Gary Guidry said his company had accepted the £5.50-a-share cash offer of $1.4-billion because it was superior to the proposed merger with TransGlobe.

"We’re extremely disappointed," said Ross Clarkson, CE of TransGlobe, which will receive a $9.25-million termination fee from Caracal.

Glencore, which has had a partnership with Caracal in Chad for the last two years, is also active in oil and gas offshore of Equatorial Guinea and in Cameroon.

The arrangement with Caracal allows Glencore to take operatorship of Caracal’s oil development activities in Chad, where Caracal has three production-sharing contracts with the government, which allow it to explore and develop over 26 103 km² in the south of the 10.8-million-population developing country, bordered by Libya in the north, Sudan in the east, Central African Republic in the south, Cameroon and Nigeria on the south-west, and Niger in the west.

“We believe the combined business will be even better placed to take advantage of the long-term opportunities across the African oil sector,” said Glencore head of oil Alex Beard.

Chad is a candidate country of the Extractive Industries Transparency Initiative, which has a global standard for transparency in the oil, gas and mining sector.

A Caracal shareholders meeting is due to take place in early June, after which closure of the transaction is likely to take place with Glencore, which employs 190 000 people in 90 offices in 50 countries and has diversified operations on 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities.

Glencore's energy footprint also embraces coal, where it is active as South Africa's largest coal exporter and 31.7% shareholder in the Richards Bay Coal Terminal, which has a capacity to export 91-million tons of coal a year.

Edited by: Creamer Media Reporter