CALGARY _ Crocotta Energy Inc. (TSX: T.CTA, Stock Forum) has agreed to be acquired by Long Run Exploration Ltd. (TSX: T.LRE, Stock Forum) in a transaction valued at about $357 million, including debt, the two companies said Thursday.
Crocotta Energy shares rose 8.4% to $4.51 Friday, leaving a market cap of $436.9 million, based on 97.7 million shares outstanding. The 52-week range is $4.30 and $2.58.
Under the agreement, each common share of Crocotta will be exchanged for 0.415 of a common share of Long Run, plus one share of a newly formed Montney-focused exploration and production company and 0.2 of a common share purchase warrant of that company, referred to as ExploreCo.
In conjunction with the arrangement, certain officers, employees and directors will purchase up to 7.65 million units of ExploreCo at $1.70 per unit for total proceeds of up to $13 million.
Crocotta and ExploreCo have also entered into a bought deal agreement with a syndicate of underwriters lead by National Bank Financial Inc. (TSX:NA) to raise $30 million through a private placement of subscription receipts of ExploreCo at a price of $1.70 apiece.
Long Run said the transaction will result in it acquiring Crocotta's strategic Edson Cardium and Bluesky assets.
The $357-million cost involves the issuance of some 44 million Long Run shares at a share price of $5.50 and the assumption of approximately $115 million of net debt, including transaction costs.
The deal is expected to close in mid-August.