Irish oil company takes Melrose

Irish exploration company Petroceltic is set to take control of British oil exploration and production company Melrose Resources in a £165m (€210m) deal which will basically double the size of the Dublin-based firm.

The merger — which is, in effect, a reverse takeover by Petroceltic of the Edinburgh-headquartered company — will double Petroceltic’s market capitalisation to around £350m.

The enlarged company will be 54% owned byexisting Petroceltic shareholders and 46% owned by Melrose’s shareholder base.

While one London-based analyst — Richard Griffith of Oriel Securities — told Reuters that he views the deal as not being particularly good for Melrose, it is understood the Scottish company’s shareholders fully support the move.

Both companies will put the transaction to their shareholders on Sep 20, with the deal expected to be formally concluded in early October.

Petroceltic chief executive Brian Ó Cathain said the merger offered a compelling opportunity to create a regionally focused company, balanced between production, development and exploration.

The deal will also significantly grow Petroceltic’s asset base. Currently active in Algeria, Italy, and Kurdistan, the addition of Melrose will give it assets near the Black Sea in Bulgaria and Romania, as well as in Egypt and Turkey.

The enlarged Petroceltic will remained headquartered in Dublin, with its existing management team bolstered by David Thomas and Robert Adair of Melrose, coming on board as chief operating officer and non-executive chairman, respectively. The company — currently listed on the ESM market in Dublin and London’s AIM — also hopes to take a dual listing on the main stock markets in those two cities within the next 12 months.

It is understood that Melrose was the prime mover of this deal happening and Mr Adair said, yesterday, that its execution represents “an exciting opportunity” for all shareholders.