Serica Energy (LON: SQZ), the AIM-listed North Sea oil and gas producer, has confirmed its recommended cash offer for Pharos Energy is final and will not be increased, stepping back from a bidding contest with rival suitor Ratio Petroleum Energy LP.
Serica shares closed Friday at 232.0p and were indicated at 229.6p in early pre-market trade, down around 1%. The move should not be read as a reaction to the Pharos statement, which concerns a bid for another company rather than Serica’s own business.
Serica and Pharos Energy, the AIM-listed oil and gas explorer with assets in Vietnam and Egypt, agreed a recommended cash offer worth a total 32.6683p per Pharos share on 26 July, made up of 28.6683p in cash plus a 4.0p special dividend. On Friday, Ratio Petroleum Energy LP announced a higher, all-cash counter-offer already backed by irrevocable undertakings, binding promises to accept, from holders of approximately 41.76% of Pharos’s issued share capital.
Rather than match or top Ratio’s bid, Serica’s board today declared its offer terms final under Takeover Code discipline, meaning the price is capped and will not rise unless a new third-party bidder emerges for Pharos or the Takeover Panel, the regulator overseeing UK takeover rules, grants consent in exceptional circumstances. With Ratio already holding acceptances covering more than two-fifths of Pharos’s shares, that leaves its higher offer as the likely winning bid, and Serica’s decision effectively cedes the contest rather than risk overpaying for the asset.
Serica said it will continue to evaluate other North Sea and international M&A opportunities, framing the decision as capital discipline rather than a retreat from dealmaking. The statement was made under the individual responsibility of chief executive Chris Cox and discloses inside information under UK market abuse rules.
Serica’s Pharos offer carried no deadline of its own. That leaves its balance sheet free to pursue other opportunities, in keeping with the capital discipline it says it is applying.