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RAK Petroleum’s Mena units to merge with DNO

Dubai, July 4, 2011

RAK Petroleum, a leading oil and gas company, and Norway’s DNO International have signed an agreement to merge RAK Petroleum’s Mena subsidiaries into DNO in exchange for DNO shares to be issued to RAK Petroleum.

The consideration shares will be issued at a minimum DNO share price of NOK8.25 ($1.54) and a maximum share price of NOK10.00 against a value of the RAK Petroleum Mena assets between $250 and 300 million.

The heads of agreement provides the basis of negotiation of definitive merger documents, including an integration agreement.

The transaction will be structured as a merger of two Norwegian subsidiaries of DNO and RAK Petroleum in accordance with Chapter 13 of the Norwegian Public Companies Act, a statement said.

The merger terms were proposed by DNO management last week and endorsed by the boards of directors of both companies on Sunday, with the RAK Petroleum directors of DNO abstaining from discussion and voting during the DNO deliberations.

Definitive agreements, once reached, will be presented to the shareholders of DNO and RAK Petroleum at separate extraordinary general meetings for final approval.

“There is a compelling logic in combining the DNO and RAK Petroleum operating assets to build a first rank independent Mena upstream operator,” said Bijan Mossavar-Rahmani, chairman of the board of directors and chief executive officer of RAK Petroleum.

Mossavar-Rahmani was also voted in as chairman of the board of DNO at the June 9 annual shareholders’ meeting of that company.

“The opportunities for growth for Mena oil and gas companies with regional experience, strong assets and geographic diversity have never been better,” he added.

The headquarters of the enlarged company will remain in Oslo, Norway; operations offices will be located in the Kurdistan Region of Iraq, Yemen, the UAE, Tunisia and Oman.

DNO is considering listing the merged company on the London Stock Exchange in addition to the Oslo listing, the statement said.

A listing in London is expected to contribute to extended coverage of the company’s shares, attract interest from a broader range of MENA focused investors and provide a solid platform for follow on merger and acquisition activity.

It is expected that, on merger closing, RAK Petroleum will hold a total ownership interest in DNO of approximately 40 per cent.

RAK Petroleum currently holds a 30 per cent share in DNO. The number of shares to be issued by DNO to RAK Petroleum in consideration for the RAK MENA subsidiaries will be set by the parties based on relative valuations of DNO and the RAK MENA business.

Final consideration will be negotiated and agreed between the parties and their advisors based on an evaluation of one or more competent person reports to be prepared by one or more independent, appropriate and reputable experts. – TradeArabia News Service




Tags: Dubai | DNO | RAK Petroleum | Shares | Norway | Mena subsidiaries |

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