UAE-owned Cepsa to Acquire TSX-listed Coastal Energy for $2.2bn

Companie Espanola de Petroleo (Cepsa), the Abu Dhabi-owned Spanish oil refiner, will acquire Houston-based Coastal Energy for C$2.3bn (£1.4bn, €1.6bn, $2.2bn), a move that will augment Cepsa's exploration and production capabilities in Southeast Asia.

Cepsa and partner Strategic Resources (SRG) have agreed to pay C$19 a share in cash, a 28% premium to the closing price of Coastal's stock on 18 November on the Toronto Stock Exchange (TSX).

The deal is expected to close in the first quarter of 2014. It will be funded by Cepsa's and SRG's available financial resources, according to a Coastal Energy statement.

The deal will be Cepsa's largest since 1999. Spain's fourth largest industrial group will also assume Coastal Energy's C$51m of net debt.

Coastal Energy directors, management and shareholders, who together hold about 36.5 million shares in the company, support the takeover, according to the statement.

The deal has a termination fee of $76m.

CEPSA Chief Executive Pedro Miro said: "[The] announcement reflects an important step in increasing CEPSA's E&P capabilities. Coastal's business comprises a high-quality portfolio of upstream assets located in Southeast Asia, operated by talented management and dedicated employees. We believe that Coastal provides a tremendous foundation for furthering our E&P strategy."

Coastal Energy has assets in Thailand and Malaysia. It owns and operates Blocks G5/43 and G5/50 in the Gulf of Thailand alongside varying interests onshore in northeast Thailand, including a 13.7% interest in the Phu Horm gas field.

Coastal is also party to a Small Field Risk Service Contract with Malaysia's Petronas for the development and production of petroleum from the Kapal, Banang and Meranti oil field cluster off peninsular Malaysia.

Abu Dhabi, which holds about 6% of the world's proven oil reserves, has been acquiring energy assets overseas through state-owned companies such as Cepsa-parent International Petroleum Investment (IPIC).

Mubadala Petroleum, a division of Abu Dhabi's investment vehicle Mubadala Development, also holds concessions in the Gulf of Thailand.