DFM-listed Gulf Navigation Holding’s shareholders approved the firm’s AED 3.3 bn acquisition of three of Nasdaq-listed Brooge Energy subsidiaries, after reviewing two separate valuation reports last week, according to a press release. GulfNav’s board greenlit the acquisition of Brooge Petroleum and Gas Investment Company — as well as Brooge Petroleum and Gas Investment Company Phase III and BPGIC Phase 3 — from Brooge Energy last September.

This is a cash-and-equity transaction: The transaction will result in a 220% capital hike, GulfNav CEO Ahmed Kilani said. The transaction includes a AED 460 mn payment, along with the issuance of 358.84 mn shares to Brooge at AED 1.25 apiece, and AED 2.3 bn in MCBs at the same price with a one-year lock-up post conversion. That is in addition to AED 500 mn in MCBs to existing shareholders at AED 1.1 per share.

The rationale: “The acquisition is expected to generate significant operational synergies, including cost savings from integrated logistics and increased storage capacity. Financially, the [transaction] is projected to enhance GulfNav’s revenue streams and improve EBITDA margins over the next few years.” Kilani added. The company plans to continue to expand its logistics and storage capabilities, as well as explore alternative fuel storage, it said in the statement.

REMEMBER- Brooge Energy incurred net losses of USD 3.5 mn in 1H 2024, down from a net income of USD 37.4 mn the previous year. Meanwhile, GulfNav posted an 11.2% y-o-y decline in net income to AED 24.7 mn in 1H 2024.

What’s next? The acquisition is expected to be completed in 2Q 2025, subject to regulatory approvals.

Market reax: GulfNav’s share price closed up 2.9% at AED 5.40 on Friday. Meanwhile, Brooge Energy’s stock closed down 4.5% to trade at USD 1.3 per share on Nasdaq.

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