When you consider that for small cap explorers, dilution means...

When you consider that for small cap explorers, dilution means raising cash in exchange for shares so that they can hopefully increase the future value of the asset and this means existing shareholders have a smaller share of the future value of a developing asset, (offset slightly by an injection of cash) - investors include this likely dilution in their calculations of what the shares are worth today.

This is what ERX were up against with the 20% purchase from AOP, a bigger asset but needing to go to market to get more cash to help realise the value, which in turn would dilute the share price because the future realised value requires in total more shares.

For PRU, if they generate excess cash off their assets but don't do anything meaningful with it, they constrain the share price because the return on that cash is not much more than the current interest rate.

What we have here is a situation that is good for both - ERX avoids the need to raise cash in order to realise the future value of their asset by applying PRU cash. PRU get to apply their cash to develop a more valuable than just holding a cash asset, even potentially leveraging their existing infrastructure, which might otherwise go to waste, thereby increasing the value of the company to shareholders.

So this is not dilution to PRU by simply spreading an injection of cash across existing shares and not a dilution to ERX by the same - it is dilution but by combining the future cash from one to help realise a future asset from the other, that will (hopefully) be much more valuable than what it is today.

When they combine, the 12.8:1 exchange ratio should be explicitly what it states but the total value for the combined enterprises should be significantly better. The difference at the moment represents the risk to each party of the deal not going ahead - i.e the market is determining that it would be worse for ERX if the deal did not go ahead v PRU to the tune of 8% over a 3 month time period - depending on how likely you think the transaction is to go ahead, not a bad return under the circumstances.