Pharos Energy has backed a £145.7m takeover by Serica Energy after the North Sea producer outbid rival suitor Ratio Petroleum Energy, prompting the Pharos board to withdraw its recommendation for the earlier offer.

Serica is offering 28.6683p per share in cash, alongside a 4 pence special dividend, valuing Pharos at 32.6683p per share, or around 33.6 pence including a previously announced dividend. The offer represents a 20.7% premium to Ratio's proposal and a 28.6% premium to Pharos' undisturbed share price before the bidding process began.

Pharos shares jumped as much as 33.9% following the announcement.

The Pharos board unanimously withdrew its support for Israel-based Ratio's bid announced in June and intends to recommend Serica's offer instead. Shareholder meetings due to consider the Ratio proposal on 17 August have been postponed, with investors told to take no further action on the earlier bid.

Serica said the acquisition would accelerate its strategy of expanding beyond the UK North Sea by adding producing assets in Vietnam and Egypt, while increasing scale, reserves and production.

The transaction also fits a familiar theme that has been running through the London market for several years, where buyers exploiting what many investors and executives see as a valuation gap in UK-listed companies, especially in resources, energy, infrastructure and small/mid-cap stocks. For the full year 2025, Pharos reported group revenue of approximately $115m.

Pharos CEO Katherine Roe said: "As announced in our recent trading update, the business is benefitting from strong operational momentum. At the same time, the Board of Pharos is delighted to be recommending this offer from Serica, which delivers shareholders a material premium in cash to the Ratio Offer."

Serica CEO Chris Cox added: "The acquisition of Pharos is a compelling opportunity to deliver a first step in our long-standing strategic objective of adding to the diversification of our business through international expansion, on terms that are accretive on a per share basis across all key metrics, with multiple embedded growth options.

"Pharos brings a highly experienced regional team and an operating model that mirrors our own focus on cash generation funding both growth and returns. As we continue to invest in the UK North Sea, with a multi-well rapid return drilling programme set to begin in 2027, this presents a complementary platform from which to grow in South East Asia, a region with increasing energy demand that benefits from a supportive environment for upstream investment. With a robust balance sheet and material ongoing cash generation, we continue to analyse multiple opportunities to deliver further M&A and create significant value for shareholders."

The transaction is expected to complete in the first half of 2027, subject to shareholder, court, regulatory and government approvals in Vietnam and Egypt.

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