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Sunday, 23 September 2018

LSE-listed Soco to acquire Egypt-focused Merlon

**#5 M&A WATCH- LSE-listed Soco to acquire Egypt-focused Merlon Petroleum: London-listed Soco International announced in a statement on Thursday that it has reached an agreement to acquire Merlon Petroleum El Fayoum Co. in a USD 215 mn transaction. The transaction, if executed, would give Soco a 100% working interest in the Western Desert’s Fayum Concession. That would give the company, whose website says it currently operates in Vietnam and Angola, a “strategic platform” for “future organic and inorganic growth in Egypt and the wider MENA region,” as it is expected to add “working interest reserves of 24 mmbbls working interest resources of 37 mmbbls” to the company’s total output, in addition to around 1,570 sqm of explorable land.

Transaction structure: The USD 215 mn cash-and-shares agreement will see Soco pay USD 136 mn in cash and offer 66 mn new Soco shares equivalent to just under 20% of the company’s current issued capital. Soco will also repay Merlon’s net debt of about USD 22 mn (as of the end of last year). Merlon President and CEO Jason Stabell and his team are expected to retain their positions. The transaction should be complete some time in the first half of 2019, the statement said.

Advisors: Evercore Partners was financial advisor and sponsor. Jeffries and JP Morgan Cazenove were corporate brokers. Matouk Bassiouny served as local legal counsel for Soco.

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