Mexico’s Alfa Sab de CV and Harbour Energy Ltd have joined together to purchase Pacific Rubiales Energy Corp, a Canadian oil and gas company.
The transaction is estimated to cost $6 billion which includes company debt.
Toronto-based Pacific Rubiales is the largest independent oil and gas producer in Latin America, however, company shares have experienced a significant 80 percent drop since oil prices began to slide last summer. Mexico’s Alfa, which already has a 20 percent stake in the company, felt now was a good time to buy.
Together, Alfa and Harbour have agreed to pay about $5 Canadian per share for Pacific Rubiales. Each company will have a vested interest of 50 percent in Pacific Rubiales. Pacific Rubiales ended trading on Tuesday at $4.83 Canadian.
Harbour Energy is a joint venture between Asian commodity trader Noble Group Ltd and U.S. private-equity firm EIG Global Energy Partners.
Alfa feels that the new investment will position itself to participate more strongly in Mexico’s new energy bills by boosting its oil and gas footprint.
The Toronto-based company is a large producer of natural gas and crude oil with 90 exploration blocks in seven countries. They’re active in Colombia, Peru, Guatemala, Brazil, Guyana, Papua New Guinea and Belize.
Mexican Alfa, which is headquartered near Monterrey, has interestes in oil and gas as well as aluminum, branded foods, petrochemicals, information technology and telecommunication services and auto components. The Mexican company has a market capitalization of 164.7 billion peso.
The deal is being advised by Bank of America.