Independent Vintage Petroleum Inc., based in Tulsa, has enteredinto an agreement to acquire Canadian-based Genesis ExplorationLtd., offering C$18.25 per share in cash. The boards of bothcompanies have unanimously agreed to the offer, which puts totalconsideration, including assumption of Genesis’ estimated debt, atC$898 million (US$572 million).

The offer represents a 22% premium over Genesis’ closing priceof C$15 on March 27, and a 32% premium to its 10-day weightedaverage trading price. Vintage said it would initially fund theacquisition with existing cash and available committed creditfacilities. Based on its recently revised outlook and capitalbudget for 2001, Vintage expects the transaction to be accretive tothis year’s earnings and cash flow.

“The acquisition of Genesis builds upon our recent entry intoCanada, through the acquisition of Cometra Energy (Canada) Ltd.last year, establishing western Canada as a significant core area,”said Vintage CEO S. Craig George. “Both Vintage and Genesis havegrown through a common vision dedicated to increasing value totheir respective shareholders and this focus will continue.”

George said that going forward, the companies’ combinedtechnical and management expertise would allow “acceleratedexploitation of the assets and provide the ability to fundadditional growth opportunities.”

Genesis’ Donald Sabo, chairman, said the offer recognized thefull value of the company for shareholders. “In addition, we arepleased that our employees will be an integral part in buildingvalue for Vintage shareholders going forward, as they have forGenesis shareholders in the past.”

Under the agreement, Genesis’ board has agreed to tender, underlock-up agreements, their common shares, and to recommend that itsshareholders tender their shares to Vintage. Genesis also hasagreed to not solicit or initiate discussions with another thirdparty concerning a business combination, and Vintage has the rightto match a competing offer. The agreement also provides that, undercertain circumstances, Vintage may have the right to acquirecertain assets of Genesis at fair market value, and that Genesiswould pay Vintage a termination fee. Vintage expects to mail anoffer to Genesis shareholders, and the offer would remain in effectfor at least 21 days.

Genesis’ stock soared 21% on the news to $18.07/share and toppedthe Toronto Stock Exchange’s most active list with volume exceeding17 million shares. Vintage lost 3% to $19.91/share.

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