The all-share deal, the latest in a series of oil industry mergers, will trigger a pounds 500,000 pay-off for Tim Eggar, the former Conservative energy minister, who has been chief executive of Monument for 14 months.
Monument's founder and chairman, Tony Craven Walker, is not joining the enlarged group but will convert his 3 per cent holding in Monument into a 1 per cent stake in Lasmo, worth pounds 15.5m. Mr Eggar will become a non- executive director of Lasmo.
The Belgian group Electrafina, which owns 26 per cent of Monument, has given irrevocable undertakings to accept the bid even if a competing offer emerges, making it unlikely that a bid battle will develop.
The takeover comes just a month after Lasmo called off talks on a pounds 3bn merger with Enterprise Oil.
Monument in effect put itself up for sale in March after deciding that it could not develop its oil and gas assets on its own in areas such as the Caspian and Pakistan.
But Joe Darby, the chief executive of Lasmo, denied that he had approached Monument until after the talks with Enterprise had ended.
Monument shareholders are being offered three Lasmo shares for every seven Monument shares they hold, valuing Monument shares at 62p at last night's closing price - a 23 per cent premium to last Friday's close. Lasmo shares fell 9 per cent to 145p.
The combined group will have proven and probable reserves of 1.25bn barrels of oil, daily production of 260,000 to 300,000 barrels and a 45 per cent stake in the Liverpool Bay gas field. The two companies also have overlapping interests in the North Sea, Pakistan, the Caspian and North Africa. Mr Darby forecast initial cost savings of pounds 6m-pounds 7m and total savings, including reduced taxes, of pounds 70m-pounds 100m over three years.
Monument's head office will be closed down but Mr Darby said he did not foresee large scale job losses among its 120 staff. It is not clear yet how many of Monument's executive directors will be retained but Mr Craven Walker said that there would be a role in Lasmo for Terry Adams, Monument's regional director for the Caspian.
The other four executive directors are entitled to pay-offs of around pounds 300,000 each and will make total profits of about pounds 870,000 on their share options. In addition, Liz Airey, Monument's finance director owns 4.8m shares worth pounds 3m.
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