Delek unit Ithaca buys Eni’s UK belongings

Delek Group Ltd. (TASE:DLEKG) North Sea vitality exploration and manufacturing unit Ithaca Power (LSE: ITH) has agreed to purchase Italian vitality main Eni unit Eni UK’s North Sea fuel and oil belongings – one month after reporting it was in talks for the deal.

On this newest in a collection of acquisition offers, Ithaca can pay $940 million in inventory, giving Eni a 37.3% stake within the Delek unit. Delek itself, managed by Yitzhak Tshuva, will stay with a 52.7% stake in Ithaca, down from almost 90% earlier than the deal. 10% of Ithaca’s shares will proceed to be traded on the London Inventory Alternate.

Ithaca is traded with a market cap of £1.2 billion ($1.5 billion) whereas Eni UK was valued at $940 million for the needs of the merger. The deal will give the merged firm a valuation of at the least $2.5 billion. The deal is anticipated to be accomplished on the finish of the second quarter of 2024.

After the deal, Ithaca’s manufacturing potential (oil and fuel) will almost double to 110,000 barrels of oil equal per day from the present 60,000 barrels of oil equal per day. Previous to the deal 70% of Ithaca’s belongings have been in oil and 30% in pure fuel, whereas Eni UK’s belongings are cut up 60% oil and 40% fuel.

Ithaca expects that the corporate’s complete reserves after the deal is accomplished will improve by about 100 million barrels of oil equal to about 660 million barrels of oil equal over a interval of 15 years. Since Eni UK’s reserves are over 6-8 years, Ithaca’s purpose within the deal is to extend manufacturing within the fast time period and generate a larger money stream. Ithaca estimates that after completion of the deal, it is going to distribute a dividend of $500 million in every of the following two years.

Ithaca held its IPO on the London Inventory Alternate in late 2022 at an organization valuation of £2.5 billion ($2.9 billion) and since seen its market cap fall 50% to £1.2 billion. Since reporting talks final month to purchase Eni’s UK belongings, Ithaca’s share value has fallen an extra 18%, primarily within the two days following the report.

Two major causes for the autumn in Ithaca’s share value have been the lower in income and revenue following the autumn in oil costs, and the brand new oil and fuel tax within the UK (referred to as EPL), at a charge of 35% of earnings, which was imposed following the spike in vitality costs in 2022.

In 2023, Ithaca recorded income of $2.3 billion, down 11% from 2022, whereas revenue plunged 79% to $216 million. In 2023, Eni UK reported income of $980 million and revenue of $278 million, down 42% and 72% respectively from 2022.

The businesses imagine that the merger may also result in a rise within the marketability of Ithaca inventory, and enhance worth for the merged firm.