Pharos Energy PLC stock surged to its highest level in 2026, climbing as much as 33.9% on Monday, after rival oil and gas producer Serica Energy agreed terms for a cash takeover that outbid an existing offer from Ratio. The move extended Pharos's year-to-date gains to roughly 55%.
Serica's shares moved in the opposite direction, falling as much as 5.8% on investor reaction to the cash cost of the acquisition.
Deal mechanics and consideration
Under the agreed terms, Serica will acquire the entire issued and to be issued ordinary share capital of Pharos by means of a scheme of arrangement under Part 26 of the Companies Act 2006. Pharos shareholders will receive 28.6683 pence in cash per share, together with a special cash dividend of 4 pence per share funded from Pharos's existing cash resources, resulting in a total headline cash consideration of 32.6683 pence per share. In addition, Pharos shareholders will remain entitled to the final dividend of 0.9317 pence per share for the financial year ended December 31, 2025, which was declared on March 25, 2026 and paid on July 17, 2026.
Taken together with that final dividend, the aggregate amount Pharos shareholders will receive is 33.6 pence per share.
Board recommendations and rival offer status
The Pharos board said it had unanimously decided to withdraw its prior recommendation of the Ratio offer and now intends to recommend Serica's acquisition to Pharos shareholders on a unanimous basis. As a result, Pharos has adjourned until further notice the shareholder meetings convened for August 17 in relation to the Ratio offer, and has urged its shareholders to take no action in respect of Ratio's proposal.
The 32.6683 pence per-share cash value represents a 20.7% premium to the equivalent aggregate consideration of 27.0683 pence per share set out in the Ratio offer. It also equates to a 28.6% premium to the undisturbed closing price of 25.4 pence per Pharos share on June 23, 2026, the last business day before the Ratio bid was announced. Including the final dividend, the total package is 20.0% higher than the 28 pence per share total value attached to the Ratio offer.
Shareholder support and conditions
Serica has secured an irrevocable undertaking from Aberforth Partners LLP to vote in favour of the acquisition in respect of 59,357,027 Pharos shares, representing approximately 14.26% of Pharos shares at the latest practicable date.
The acquisition remains conditional on the satisfaction or waiver of customary conditions, including regulatory clearances in Vietnam and Egypt, among other conditions. The parties expect the acquisition to become effective in the first half of 2027, subject to those conditions being met or waived.
Market context and immediate reactions
Pharos's sharp intraday advance has pushed its year-to-date performance to roughly 55% following earlier gains of about 23% through the close on the previous Friday. Serica, despite agreeing the cash deal, had delivered roughly a 44% year-to-date increase to that same prior close. Market participants reacted to the cash consideration and the financing implied by Serica's purchase, weighing the prospective strategic and financial implications of the transaction.
As the deal progresses toward completion, shareholders, regulators and other stakeholders will focus on the formal scheme process, the fulfilment of regulatory conditions in the specified jurisdictions and any further announcements from the parties.