On 24 June 2026, the board of directors of each of Ratio and Pharos Energy plc (LON:PHAR) announced that they had reached agreement on the terms of a recommended acquisition by Ratio of the entire issued and to be issued share capital of Pharos . Under the terms of the Original Acquisition, Pharos Shareholders were entitled to receive a total value of up to 28.0 pence in cash per Pharos Share, comprising 23.0683 pence in cash per Pharos Share together with 4.0 pence in cash per Pharos Share by way of a special dividend and the FY25 Final Dividend (as defined below).
The scheme document in respect of the Original Acquisition was published and made available to Pharos Shareholders on 21 July 2026. This announcement should be read in conjunction with the Scheme Document.
Following the announcement of a competing offer for Pharos by Serica Energy plc on 26 July 2026, the board of directors of each of Ratio and Pharos have engaged in further discussions and have agreed the terms of an increased recommended all-cash offer by Ratio for the entire issued and to be issued share capital of Pharos to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.
Capitalised terms used and not defined in this announcement have the meanings given to them in the Scheme Document.
2. Increased Ratio Offer
Under the terms of the Increased Ratio Offer, Pharos Shareholders will be entitled to receive:
· 28.8183 pence in cash per Pharos Share; plus
· 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the Pharos Board intends to declare prior to completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, the Cash Consideration due to Pharos Shareholders under the terms of the Acquisition,
which would result in a total value of 32.8183 pence per Pharos Share. Pharos Shareholders, where they qualified, will continue to be entitled to retain the final dividend of 0.9317 pence in cash per Pharos Share for the financial year ended 31 December 2025 which was declared on 25 March 2026 and paid on 17 July 2026 to qualifying Pharos Shareholders on the register at close of business on 12 June 2026.
Accordingly, taking together the total value offered of 32.8183 pence per Pharos Share with the FY25 Final Dividend, the aggregate amount Pharos Shareholders will receive is 33.75 pence per Pharos Share.
The aggregate value of the Cash Consideration and the Special Dividend, 32.8183 pence per Pharos Share, values the entire issued and to be issued ordinary share capital of Pharos at approximately £146.4 million and represents:
· a premium of approximately 29.2% to the closing price of 25.4 pence per Pharos Share on 23 June 2026, being the last Business Day prior to the announcement of the Original Acquisition; and
· a premium of approximately 0.5% to the equivalent 32.6683 pence per Pharos Share being the aggregate of the cash consideration and special dividend announced in the Serica Offer.
The Increased Ratio Offer provides Pharos Shareholders with superior value than under the Serica Offer. In addition, given the combination of the irrevocable undertakings which Ratio has received (as to which see section 6 below) and Ratio’s and the Wider Ratio Energies Group’s extensive experience of obtaining regulatory consents under 7 international regimes, Ratio believes that the Increased Ratio Offer provides Pharos Shareholders with greater certainty and deliverability than will be achieved under the Serica Offer.
If, on or after the date of this announcement and on or prior to the Effective Date, any dividend, distribution or other return of value is declared, made, or paid, or becomes payable by Pharos (other than the FY25 Final Dividend and the Special Dividend), Ratio reserves the right to reduce the consideration under the terms of the Acquisition by the amount of such dividend, distribution or other return of value in which case any reference to consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. In such circumstances, Pharos Shareholders shall be entitled to retain any such dividend, distribution, or other return of value declared, made, or paid.
3. Conditions
The Acquisition is subject to the terms and conditions in Part 4 of the Scheme Document dated 21 July 2026:
· with references to the “Cash Consideration” therein being read as 28.81830 pence in cash per Pharos Share, being the Cash Consideration as set out this announcement;
· with references to Conditions 3.1.1, 3.1.2, 3.1.3 and 3.1.6 (as set out in Part A of Part 4 of the Scheme Document) being read as corrected in the announcement made by Ratio on 27 July 2026; and
· with reference to the Long Stop Date being read as 15 July 2027, or such later date: (i) as may be agreed in writing by Ratio and Pharos (with the Panel’s consent, if required); or (ii) (in a competitive situation) as may be specified by Ratio with the consent of the Panel; or (iii) as the Panel may direct under the Note on Section 3 of Appendix 7 of the Code, and, in each case, as the Court may approve (if such approval is required).
4. Pharos Directors’ recommendation of the Increased Ratio Offer
The Pharos Directors, who have been so advised by Rothschild & Co as to the financial terms of the Increased Ratio Offer, consider the terms of the Increased Ratio Offer to be fair and reasonable. In providing its advice to the Pharos Directors, Rothschild & Co has taken into account the commercial assessments of the Pharos Directors. Rothschild & Co is providing independent financial advice to the Pharos Directors for the purposes of Rule 3 of the Code.
Accordingly, the Pharos Directors unanimously recommend that Pharos Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting as the Pharos Directors who hold Pharos Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 2,380,289 Pharos Shares representing, in aggregate, approximately 0.57 per cent. of the ordinary share capital of Pharos in issue as at close of business on 6 August 2026, being the latest practicable date prior to publication of this announcement (the “Latest Practicable Date“).
In light of their recommendation of the Increased Ratio Offer, the Pharos Directors have decided unanimously to withdraw their recommendation of the Serica Offer and will not be proceeding to post a scheme document in connection with the Serica Offer to Pharos Shareholders. It is therefore recommended that Pharos Shareholders take no further action in relation to the Serica Offer.
5. Irrevocable Undertakings
As noted above, Ratio has received irrevocable undertakings from each of the Pharos Directors who hold Pharos Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), in respect of a total of 2,380,289 Pharos Shares, representing approximately 0.57 per cent. of the existing issued ordinary share capital of Pharos on the Latest Practicable Date.
Ratio has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from Pharos Shareholders in respect of a total of 171,470,348 Pharos Shares representing, in aggregate, approximately 41.19 per cent. of Pharos’ existing issued ordinary share capital on the Latest Practicable Date. As a result of the Increased Ratio Offer, these irrevocable undertakings continue to apply in accordance with their terms.
Ratio has therefore received irrevocable undertakings in respect of a total of 173,850,637 Pharos Shares representing, in aggregate, approximately 41.76 per cent. of Pharos’ existing issued ordinary share capital in issue on the Latest Practicable Date.
Further details of these irrevocable undertakings are set out in paragraph 4 of Part 7 of the Scheme Document.
As a result of this Announcement, the irrevocable undertakings given by Blue Albacore Business Ltd, Ettore Contini, Palamos Limited and the Ed Story Estate are no longer capable of lapsing under paragraph 7.1.4 or 7.1.5 (as applicable) of the relevant undertakings. As such, these irrevocable undertakings, which collectively account for 81,409,041 Pharos Shares representing 19.55 per cent of Pharos’ issued share capital, will continue to be binding in accordance with their terms notwithstanding any higher competing offer from any third party, including Serica.
As a result of this Announcement, the irrevocable undertaking given by Aberforth Partners LLP in respect of the Serica Offer will lapse in accordance with its terms.
Unless a third party (including Serica) announces, prior to 11 August 2026 (being 15 Business Days after the date of despatch of the Scheme Document) a firm intention to make an offer to acquire all the issued and to be issued share capital of Pharos on terms which represent an improvement of 15 per cent, or greater in the amount or value of the consideration offered under the terms of the Increased Ratio Offer and Ratio does not, within 10 Business Days of such third party announcement, announce revised terms for the Increased Ratio Offer which are equal to or exceed the value of such third party offer, the irrevocable undertakings given by Bradley Radoff and the Radoff Family Foundation shall no longer be capable of lapsing under paragraph 7.1.4 of the relevant undertakings. As such, if no third party offer is made which meets the requirements set out above prior to 11 August 2026, these irrevocable undertakings, which collectively account for 90,061,307 Pharos Shares representing 21.63 per cent. of Pharos’ issued share capital, will continue to be binding in accordance with their terms notwithstanding any higher competing offer from any third party.
6. Timetable
The Scheme Document was published on 21 July 2026 and included, among other things, notices of the Court Meeting and General Meeting which were convened for 17 August 2026. Given the proximity of this Announcement to the proposed date of the Meetings and in order to provide Pharos Shareholders with more time to make informed voting decisions, the Pharos Board intends to adjourn these Meetings to a later date which it will announce in due course along with an updated timetable of principal events for the implementation of the Scheme.
The Long Stop Date is in any case being extended such that the Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the provisions of the Code, by no later than 11.59 p.m. on 15 July 2027, or such later date: (i) as may be agreed in writing by Ratio and Pharos (with the Panel’s consent, if required); or (ii) (in a competitive situation) as may be specified by Ratio with the consent of the Panel; or (iii) as the Panel may direct under the Note on Section 3 of Appendix 7 of the Code, and, in each case, as the Court may approve (if such approval is required).
7. Co-operation Agreement
On the basis that the Pharos Board has reinstated its recommendation of the Increased Ratio Offer, Ratio and Pharos have agreed not to treat the announcement of the Serica Offer as a termination event in relation to the Co-operation Agreement and Ratio has also agreed not to elect to implement the Acquisition as a Takeover Offer without the consent of Pharos, insofar as that right arose as a result of the announcement of the Serica Offer.
8. Financing of the Increased Ratio Offer
The Cash Consideration payable under the Increased Ratio Offer will be funded by an increased irrevocable letter of credit dated 6 August 2026 (“Increased LoC“) from Israel Discount Bank Ltd, applied for by Ratio Energies, and which has been made available in favour of Ratio as beneficiary.
It is eventually intended that the Cash Consideration to be payable by Ratio to Pharos Shareholders under the terms of the Acquisition may be funded, to the extent available to Ratio, through a combination of some or all of the following: a debt raising and/or a capital raising and/or bank financing. If any such alternative financing arrangements materialise, a further announcement will be made at the appropriate time.
Shore Capital, in its capacity as financial adviser to Ratio, is satisfied that sufficient cash resources are available to Ratio to satisfy in full the increased Cash Consideration payable by Ratio to Pharos Shareholders pursuant to the Increased Ratio Offer.
9. General
The Increased Ratio Offer does not change the strategic plans and intentions of Ratio with regard to management, employees, pensions, research and places of business of Pharos, as set out in paragraph 7 of Part 1 of the Scheme Document, or the proposals in respect of the Pharos Share Plans, as set out in paragraph 9 of Part 2 of the Scheme Document.
10. Consents
Shore Capital and Rothschild & Co have each given and not withdrawn their consent to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear.
11. Documents available on the website
Copies of the following documents will be available, free of charge, on Pharos’ website at https://www.pharos.energy/investors/offer-by-ratio-petroleum/ and Ratio’s website at https://ratiopetroleum.com/Offer-disclaimer/ no later than 12 noon on the Business Day following the date of this announcement and for the period up to and including the Effective Date or the date on which the Scheme lapses or is otherwise withdrawn, whichever is the earlier:
• this announcement;
• the Increased LoC; and
• the consent letters from each of Shore Capital and Rothschild & Co referred to in paragraph 9 above.
For the avoidance of doubt, neither the contents of those websites nor the contents of any website accessible from hyperlinks on those websites (or any other websites referred to in this announcement) are incorporated into, or form part of, this announcement.
