Glencore Xstrata, the global commodities trading and mining group, has agreed to buy Caracal Energy for about $1.3 billion. As a result, Caracal is also announcing that it has terminated a prior agreement under which it proposed to merge with Calgary-based TransGlobe Energy Corporation.

“Termination is on the basis that the unsolicited proposal from Glencore constitutes a superior proposal. Caracal has paid to TransGlobe a termination fee of US$9.25 million as required under the terms of the Proposed TransGlobe Merger,” the company said in a statement.

The arrangement, which is expected to close in the second quarter of 2014, will help Caracal eliminate the risks associated with business plan execution and allow Glencore to take on operatorship and a larger working interest to more fully benefit from the development of Caracal’s Chad oil development and exploration operations.

“The premium all-cash offer from Glencore is strong recognition of the significant value Caracal has created for its shareholders since inception. This transaction and the significant premium it places on our shares is an excellent outcome for our shareholders. Glencore has been an important supporter and partner of Caracal in Chad and this is a natural progression in the development of this portfolio,” said Caracal president and CEO Gary Guidry.

“Both companies have had a successful partnership since 2012. This transaction deepens our relationship, adding further value and expertise to our growing oil business in Africa. We believe the combined business will be even better placed to take advantage of the long term opportunities across the African oil sector,” said Glencore Head of Oil Alex Beard.

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