Perth-based Po Valley Energy has decided to hang onto its northern Italian oil and gas assets.

The ASX-listed junior (ASX:PVE) previously struck an all-scrip deal to sell its onshore and offshore assets in northern Italy to AIM-listed Saffron Energy.

But both companies have now mutually agreed to drop the deal.

Shares were up nearly 5 per cent at 4.5c by midday Thursday on the back of the news.

PVE shares over the past year.
PVE shares over the past year.

Po Valley already owns 100 million shares, or 53.8 per cent, of Saffron, and the deal would have given the company control over a further 200 million shares.

However, tax complications and the view of an independent expert that the transaction was “neither fair nor reasonable” led to the deal’s demise.

The northern Italian assets include a 63 per cent interest in the Selva gas development field and the fully owned Teodorico offshore gas development field and Torro del Morro oil and condensate exploration field.

BDO Corporate Finance placed a preferred valuation of €46.9 million ($73.9 million) and a top valuation of €69.3 million ($109.3 million) on the projects, which according to the independent expert report values the assets at more than the planned sale.

After Po Valley got its hands on that information it told Saffron it would not be able to recommend the transaction to Po Valley shareholders.

The company says it is confident that shareholders will benefit from less dilution of and increased focus on the Italian gas assets.