This morning Reconnaissance Energy Africa Ltd (OTCMKTS:RECAF) made an announcement related to an acquisition and the stock is trading higher by as much as 29%.
As of 12:30 shares of RECAF were trading at 6.61 up .51 for a gain of about 8%. Trading is very heavy already 5 times its 30-day average volume. The range has been between a low of 6.52 and a high of 8.30.
Shares of RNSFF are down slightly after a big gap open. Trading opened the day at .394 but the stock could not hold the early gains and it has sold off. Volume is 18 million shares over 30 times its 30-day trading average.
Reconnaissance Energy announced that it signed a binding letter of intent with Renaissance Oil Corp (OTCMKTS:RNSFF) regarding the acquisition. As per the terms of the agreement, Reconnaissance Energy Africa is going to acquire the outstanding and issued shares in Renaissance.
Additionally, it will also acquire all convertible securities in Renaissance.
As per the letter of intent between the two parties, Reconnaissance is going to award 0.46 units of its own share for each Renaissance share held by the shareholders. It should be noted that the value of the transaction reflects a premium of 1.45% over the closing price of the Renaissance stock on April 16 on the TSX Venture Exchange. It now remains to be seen how investors react to the news today. As per the press release:- “Pursuant to the LOI, ReconAfrica will issue to each holder of a Renaissance Share 0.046 of a common share of ReconAfrica (each whole common share, a “ReconAfrica Share”) (the “Consideration”). The value of the Consideration represents a 1.45% premium over the closing price of the Renaissance Shares on the TSX Venture Exchange (the “TSXV”) on April 16, 2021, the last day of trading prior to the announcement of the Transaction, and based on the closing price of the ReconAfrica Shares on the TSX.V of $7.62 on April 16, 2021. The terms of the Transaction value Renaissance at $.35 per share or approximately $155 million. Following the completion of the Transaction, current shareholders of Renaissance will hold approximately 20,340,792 shares or 11.36% of the fully-diluted issued and outstanding shares of ReconAfrica.”