Abu Dhabi’s Cepsa Pays $2.2 Billion for Coastal Energy

Cia. Espanola de Petroleos SA, the Abu Dhabi-owned oil refiner, agreed to buy Coastal Energy Co. (CEO) for C$2.3 billion ($2.2 billion) as the Middle East sheikhdom adds to crude and natural-gas assets in Southeast Asia.

Cepsa, as the Madrid-based company is known, and partner Strategic Resources (Global) Ltd. agreed to pay C$19 a share, 28 percent more than Coastal Energy’s closing price yesterday, the Houston-based company said in a statement. The venture will take on Coastal Energy’s C$51 million of net debt as part of the deal, due to close in the first quarter.

Abu Dhabi, the capital of the United Arab Emirates and holder of about 6 percent of global oil reserves, is boosting access to energy assets abroad through government-owned companies like International Petroleum Investment Co., Cepsa’s owner. Buying Coastal gives IPIC indirect stakes in production and exploration in the Gulf of Thailand, where a unit of Abu Dhabi’s Mubadala Development Co. also holds concessions.

“Coastal’s business comprises a high-quality portfolio of upstream assets located in Southeast Asia,” Cepsa Chief Executive Officer Pedro Miro said in the statement. Coastal Energy’s board unanimously backs the deal, CEO Randy Bartley said in the statement.

Photographer: Xabier Mikel Laburu/Bloomberg

A Cepsa refinery and petro-chemical compound is illuminated at night, in San Roque. Close

A Cepsa refinery and petro-chemical compound is illuminated at night, in San Roque.

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Photographer: Xabier Mikel Laburu/Bloomberg

A Cepsa refinery and petro-chemical compound is illuminated at night, in San Roque.

Thailand, Malaysia

Coastal Energy fell 3.8 percent to C$14.81 per share at the close in Toronto yesterday. The stock is down 26 percent this year, compared with an 8 percent increase in the S&P/TSX Composite Index. Media representatives at IPIC were not immediately available for comment on the deal today.

The acquisition is the biggest purchase since 1999 for Cepsa, Spain’s fourth-largest industrial group. Cepsa holds oil production and refining, petrochemical and electricity generation assets in Algeria, Brazil, Canada, Colombia and Panama among others. Coastal Energy also holds onshore exploration concessions in Thailand and is a partner in a service contract for a series of fields in Malaysia.

Coastal Energy directors, management and shareholders, who together hold about 36.5 million shares in the company, have agreed to support the acquisition, according to the statement. The deal has a break-up fee of $76 million.

Citigroup Inc. and Credit Suisse Group AG are financial advisers for Coastal Energy. Goldman Sachs Group Inc. is the financial adviser for Cepsa, and PriceWaterhouseCoopers is advising both Cepsa and Strategic Resources.

To contact the reporters on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net; Stephen Voss at sev@bloomberg.net

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