Serica maintains Pharos bid stance despite Ratio escalation

UK-based Serica Energy has confirmed it will not increase its offer to acquire Pharos following an escalated rival proposal from competitor Ratio. The London-listed firm stated that the £145.7 million valuation presented last month remains final, though a reserve right exists should another third party enter the bidding war.

Ratio, headquartered in Israel, submitted a revised bid of £146.4 million on Friday, representing an increase of 0.5 per cent over Serica’s initial figure. Current voting data indicates that approximately 41.76 per cent of Pharos shareholders favour Ratio’s terms. However, regulatory approval requires support from at least 75 per cent of the shareholder base alongside necessary government consent for the transaction to proceed.

The dispute marks an intensification in a competitive rivalry between Serica and Ratio regarding control over oil and gas assets located in Vietnam and Egypt. If successful, the acquisition would constitute Serica’s first significant venture into production outside its traditional North Sea operations. The proposed deal is structured primarily as a cash transaction involving 28.6683 pence per share plus an additional four pence raised via a special dividend.

Serica highlighted that it has secured $750 million in lending facilities following recent acquisitions completed during the current financial year, positioning itself with robust liquidity to complete the purchase. Analyst Ashley Kelty of Panmure Liberum suggested that aligning with Serica offers greater stability compared to Ratio’s marginal price increase.

Kelty questioned claims made by Ratio regarding certainty and deliverability, noting the Israeli firm has not demonstrated funding security given its weaker balance sheet profile. In contrast, he pointed out that Serica possesses clear financial resources capable of acquiring Pharos without issue. The company reiterated in a stock exchange statement that terms would remain unchanged unless an alternative offeror from outside the current competition introduces a new proposal or demonstrates a firm intention to do so.