Proposed Combination of Kistos PLC with Serica Energy plc Revised Combination Terms

Kistos plc (“Kistos”) is today announcing an update to the proposed combination with Serica Energy plc (“Serica”) (the “Proposed Combination”), first announced on 12 July 2022 (the “First Possible Offer Announcement”).

The Board of Kistos confirms that on 22 July 2022 it wrote to the Board of Serica setting out an update to the Proposed Combination, with Kistos revising the combination terms for the entire issued and to be issued share capital of Serica (the “Revised Combination Terms”), as set out below.

The Board of Serica rejected the Revised Combination Terms, with no rationale given nor engagement with the Board of Kistos. The Board of Kistos, therefore, in the interest of continued transparency has decided to announce these Revised Combination Terms.

The Proposed Combination comprises a possible cash and share-for-share exchange offer by Kistos for Serica. Under the Revised Combination Terms, Kistos would offer for each Serica share:

· 0.4000 new Kistos shares; plus

· cash of 213 pence, comprising:

o a distribution of capital to Serica shareholders via a cash payment of 67 pence per share; and

o cash consideration equivalent to 146 pence per Serica share.

Based on the closing price of 530 pencei per Kistos share on 22 July 2022 (the “Latest Practicable Date”), the Revised Combination Terms give an offer value of 425 pence per Serica share, representing a premium of:

· 19% to the closing price of 357 pence[i] per Serica share on the Latest Practicable Date;

· 39% to the closing price of 305 pencei per Serica share on 11 July 2022, being the last business day before the First Possible Offer Announcement; and

· 35% to the six-month volume weighted average price of 315 pencei per Serica share on the Latest Practicable Date.

The Revised Combination Terms represent an 11% increase to the headline offer value as set out in the First Possible Offer Announcement[ii].

Under the Revised Combination Terms, Serica shareholders would own approximately 58% of the issued share capital of the combined business (the “Combined Company”), in addition to receiving a significant cash component.

The Revised Combination Terms represent a reduced level of leverage in the Combined Company by approximately £93 million relative to the terms presented in the First Possible Offer Announcement, reflecting feedback from both the Board of Serica and Serica’s shareholders.

In addition, the Board of Kistos also believes that the Proposed Combination would allow Serica shareholders to gain direct unhedged exposure to the stronger continental European gas market through Kistos’ Dutch gas assets. Over the three months prior to the Latest Practicable Date, Dutch Title Transfer Facility (“TTF”)[iii] prices have traded at an average premium of above 50% over British National Balancing Point (“NBP”)[iv] prices and as at the Latest Practicable Date TTF prices have a stronger forward outlook than NBP, with the expected 2023 forward curve trading at a c.7% premium over NBP[v].


In contrast to the proposal by the Board of Serica on 1 July 2022, Kistos also set out a framework for the governance of the Combined Company which included a Board to reflect a balanced contribution from each of Kistos and Serica and a proposal on the roles of Chairman and CEO.

Next Steps

Kistos continues to urge Serica shareholders to encourage the Board of Serica to engage in constructive discussions with the Board of Kistos regarding the Proposed Combination.

Important Takeover Code notes

As stated on 12 July 2022 in the First Possible Offer Announcement, in accordance with Rule 2.6(a) of the Takeover Code, Kistos must, by not later than 5.00 p.m. (London time) on 9 August 2022, either announce a firm intention to make an offer for Serica in accordance with Rule 2.7 of the Takeover Code (a “Kistos Firm Offer”) or announce that it does not intend to make an offer for Serica, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. This deadline will be extended only with the consent of Serica and the Panel on Takeovers and Mergers (the “Panel”) in accordance with Rule 2.6(c) of the Takeover Code.

Pursuant to Rule 2.5 of the Takeover Code, Kistos reserves the right to:

1. Vary the form and/or mix of the consideration for the Proposed Combination at its discretion; and

2. Make an offer at any time at a lower value or on less favourable terms:

a. with the recommendation or consent of the Board of Serica;

b. if Serica announces, declares or pays any dividend or any other distribution to shareholders (in which case Kistos will have the right to make an equivalent reduction to the Revised Combination Terms);

c. if a third party announces a firm intention to make an offer for Serica on less favourable terms than the Revised Combination Terms; or

d. following the announcement by Serica of a Rule 9 waiver pursuant to the Takeover Code or a reverse takeover (as defined in the Takeover Code).

A further announcement will be made as appropriate. There can be no certainty that a Kistos Firm Offer will be made.

Kistos confirms that this announcement is not being made with the consent of Serica.

Other information

For the purposes of UK MAR, the person responsible for arranging release of this Announcement on behalf of Kistos is Andrew Austin, Executive Chairman.

Terms used but not defined in this announcement shall have the meanings given in the First Possible Offer Announcement.


Kistos plc

Andrew Austin, Executive Chairman

c/o Camarco Tel: +44 (0) 20 3757 4983

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