After Institutional Shareholder Services (ISS), a proxy advisor, endorsed the proposed business combination between Canada’s TransGlobe Energy Corporation and the Houston-based Vaalco Energy, TransGlobe shareholders are being encouraged to vote in favour of this merger to create “a world-class African-focused E&P company.”
ISS’ reports and a unanimous recommendation that TransGlobe shareholders vote for the proposed business combination of TransGlobe and Vaalco to create “a world-class African-focused E&P company,” comes after the Canadian firm and the U.S. player entered into a definitive arrangement agreement in July 2022. This deal will allow Vaalco to acquire all of TransGlobe’s outstanding common shares in a stock-for-stock strategic business combination transaction valued at $307 million .
In a statement on Wednesday, TransGlobe welcomed the findings and analysis from ISS, noting the “solid strategic rationale” for the combination and the potential upside the combined company would provide, with shareholders benefiting from “a more diversified set of operating assets and attractive opportunities for capital allocation.”
Furthermore, the Canadian player confirmed that ISS’ recommendations were in line with the unanimous approval of the proposed business combination by its board of directors. According to TransGlobe, the combined company will have “a complementary portfolio” with diversified production and revenue, and “a robust net cash balance sheet” allowing disciplined investment across its “high-quality inventory of multi-year opportunities.”
In addition, the combined firm will be able to support “meaningful, sustainable returns and value growth,” targeting a base dividend of $28 million ($0.25/share) with commitments to commencing a share buyback program of up to $30 million (up to $0.27/share) on completion of the combination with “further supplementary shareholder returns” via potential special distributions.
Randy Neely , President & CEO of TransGlobe commented: “We are very pleased that ISS has endorsed this transaction and encourage all TransGlobe shareholders to vote for the combination of TransGlobe and Vaalco. The board and management of the company continue to unanimously support the combination which offers shareholders a compelling opportunity and will deliver material benefits for TransGlobe shareholders.”
The combined company will have assets located in “prolific and established” basins in Egypt , Gabon , Equatorial Guinea and Canada , with “significant future growth potential.”
When it comes to Vaalco’s most recent activities, it is worth noting that the U.S. player agreed on a short-term contract extension with BW Offshore for an FPSO operating off Gabon.
This FPSO will be replaced with an FSO unit as part of the Etame Marin field reconfiguration project.