Baytex to Buy Australia's Aurora Oil & Gas at Big Premium
A banker close to the deal declined to comment on whether there would be other bidders.
Aurora produces 24,678 barrels of oil equivalent per day, less than half the 57,100 boepd Baytex produced last year.
"There is obviously quite a large disconnect between how the Australian market has been valuing these companies, and what the U.S. or North American corporates seem to be willing to pay," Bullen of Bank of America Merrill Lynch said, noting that Baytex could use Aurora's assets to fill gaps in its portfolio.
Boosted by Aurora's rally, Australian energy producers AWE Ltd and Karoon Gas Australia Ltd jumped 7.2 percent and 6.3 percent respectively.
Baytex shares rose 47 Canadian cents to C$41.63 before being halted on the Toronto Stock Exchange late on Thursday. The deal was announced after markets closed.
Baytex will fund the takeover in part with a C$1.3 billion share issue underwritten by Scotiabank and RBC Capital markets, while Aurora is advised by Credit Suisse and Goldman Sachs.
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