US oil firm Isramco signs merger agreement with Naphtha Group

Independent oil and natural gas company Isramco has signed a definitive merger agreement with Naphtha Israel Petroleum (Naphtha), Naphtha Holding (NHL), Israel Oil Company (IOC) and Naphtha US Oil, under which the Naphtha Group will acquire all of the issued and outstanding Isramco common stock prior to the merger.

The holders of the company’s outstanding shares of common stock will receive $121.40 a share in cash, other than the shares owned by NHL or IOC; shares held by Isramco as treasury stock, and shares in respect of which appraisal rights have been properly and validly exercised under Delaware law.

The $121.40 a share price represents a premium of 10% over the $110.36 purchase price per share initially offered by Naphtha and a premium of 4.4% over the 30 trading-day average prices of the company’s common stock as of 17 May.

IOC chairman Haim Tsuff owns approximately 73.0% of the outstanding common stock of Isramco.

The company’s board of directors has approved the merger agreement and the transactions planned under the merger agreement.

A special committee has negotiated the terms of the merger agreement with the Naphtha Group, with the assistance of independent financial and legal advisers.

After the closing of the merger, Isramco will become an indirect wholly owned subsidiary of Naphtha and is expected to remain headquartered in Houston, Texas.

The merger is subject to Isramco stockholders’ approval, including a non-waivable condition requiring approval by the holders of a majority of the outstanding shares of Isramco common stock that are not beneficially owned by the members of the Naphtha Group, as well as other customary closing conditions.

However, the merger is not subject to a financing condition.

Duff & Phelps is serving as financial adviser to the special committee while Norton Rose Fulbright US is serving as legal counsel.

Baker Botts is serving as US legal counsel to the Naphtha Group.