(Reuters) - Israel's Delek Group (TA:DLEKG) said it had offered $524 million for the 80 percent of shares in oil producer Ithaca Energy Inc (TO:IAE) it does not already own as it seeks to build up its North Sea assets ahead of a planned London listing.
Ithaca, listed in Toronto and London, said on Monday its board had recommended the Israeli conglomerate's cash offer of C$1.95 per share, which equates to 1.20 pounds.
The offer, a premium of about 12 percent to Ithaca's closing price of C$1.74 on Friday, implies an enterprise value of about $1.24 billion, Ithaca said.
Ithaca has its headquarters in the Scottish city of Aberdeen and is focused on North Sea oil and gas.
Delek bought a 13.18 percent stake in Faroe Petroleum (L:FPM), another North Sea operator, for 43 million pounds ($53.7 million) in December.
Delek, with natural gas exploration and production activities in the eastern Mediterranean, already owns 19.7 percent of Ithaca.
The bid values the entire company at $646 million and is conditional upon more than 50 percent of shares not held by Delek taking up the offer.
A spokesman for Delek said the company plans to list in London during 2017 but could not say whether new shares would be sold.
Delek Chief Executive Asaf Bartfeld said the deal would contribute to the company's growth and to solidifying its position in the international market.
"The Ithaca transaction will substantially strengthen our international operational arm and is a synergistic step to our existing activities," he said in a statement.
Ithaca is a partner in 25 projects and is the operator in 12 of them, including the Stella field in the North Sea which is expected to begin production later this month. Delek said Stella will be a big step up for Ithaca in terms of production amounts.
BMO Capital Markets analyst David Round said Ithaca has always been seen as a takeover candidate.
"This looks like a reasonable price, although Delek is clearly retaining some upside, particularly around Ithaca's 'pre development' portfolio as well as its attractive tax loss position," Round said in a research note. ($1 = 0.8030 pounds)