Pharos Energy (LSE:PHAR) shares soared to their highest level of 2026 on Monday after Serica Energy (LSE:SQZ) agreed a recommended cash acquisition valued at approximately £145.7 million, surpassing a competing proposal from Ratio. While Pharos surged by as much as 33.9%, extending its gains for the year to around 55%, Serica shares fell as much as 5.8% as investors weighed the cost of the acquisition.
Before Monday’s rally, Pharos shares had already gained around 23% since the start of the year, while Serica had risen approximately 44%. Under the agreed terms, Serica will acquire the entire issued and to-be-issued share capital of Pharos through a scheme of arrangement under Part 26 of the Companies Act 2006.
Pharos board backs Serica proposal
The board of Pharos has unanimously withdrawn its recommendation for the competing Ratio offer and now intends to recommend Serica’s acquisition to shareholders.
As a result, the shareholder meetings previously scheduled for August 17 in relation to the Ratio proposal have been postponed indefinitely, with Pharos advising investors not to take any action regarding the rival bid.
Under the agreed transaction, shareholders will receive 28.6683 pence in cash for each Pharos share, together with a special cash dividend of 4 pence per share funded from the company’s existing cash resources. This brings the total consideration to 32.6683 pence per share.
Investors will also retain the previously declared final dividend of 0.9317 pence per share for the financial year ended December 31, 2025, which was announced on March 25, 2026, and paid on July 17, 2026. Including that payment, the total value received by shareholders amounts to 33.6 pence per share.
Offer delivers significant premium
The cash consideration of 32.6683 pence per share represents a premium of 20.7% compared with the equivalent value of 27.0683 pence per share offered by Ratio. It also represents a 28.6% premium to Pharos’ closing share price of 25.4 pence on June 23, 2026, the final trading day before the Ratio proposal was announced.
Including the retained final dividend, the overall value of Serica’s proposal is 20.0% higher than the total 28 pence per share offered by Ratio.
Serica has also secured an irrevocable undertaking from Aberforth Partners LLP to vote in favour of the acquisition in respect of 59,357,027 Pharos shares, representing approximately 14.26% of the company’s issued share capital.
Completion targeted for 2027
The transaction remains subject to a number of conditions, including regulatory approvals in Vietnam and Egypt, as well as the satisfaction or waiver of other customary closing requirements.
Subject to these approvals, the companies expect the acquisition to become effective during the first half of 2027.
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