Based on yesterday's share price, this offer represents a 34 per cent premium on Arc's latest price and a 72% premium on the last three month's volume weighted average price.
The Tap board said it sees considerable synergies in exploration, oil and gas production as well as marketing between the two groups.
According to Tap, if Arc shareholders accept the offer, they will get the benefit of its technical and funding capacity, exposure to the highly prospective Carnarvon Basin, to production and exploration in the Perth Basin as well as a large drilling program. In addition they will be entitled to a capital gains tax roll-over relief if Tap acquires at least 80% of Arc.
Tap Oil has appointed JB Were and Clayton Utz as advisers and is expected to lodge a bidder's statement shortly.
Arc directors told shareholder to wait until the bidder's statement was lodged and the board had time to consider the proposal.
Arc shares rocketed to 45c in morning trade, up almost 40% on heavy volume. Tap was steady at around $1.70.
