Petrolifera Petroleum Limited (TSE:PDP) (PINK:PRFPF) surprised shareholders by adding more than 26% to its share price yesterday, yet it will be as far as the rally goes since the company was given an acquisition proposal at $1.02 per share.Some minor fluctuations always occur while waiting for acquisitions to actually pass through, yet there is no more opportunity for large gains at the moment.
Petrolifera inked an arrangement agreement with Gran Tierra Energy Inc., under which the latter will acquire all of the stock of PDP. The arrangement was unanimously approved by the board of directors and suggested the shareholders would vote in favor as well. The agreement is a result of prolonged considerations carried out by a Special Committee since September 2010 when the company decided to review its strategic alternatives.
The transaction is anticipated to be completed in March 2011. Petrolifera’s shareholders will receive 0.1241 share of Gran Tierra for each share of PDP. Warrant holders of Petrolifera will receive 0.1241 of a common stock purchase warrant of Gran Tierra, exercisable at the price of $9.67 per share.
Total cost of the transaction is currently calculated at $195 million. The price takes into account the outstanding debt, working capital and investments currently held by Petrolifera.
