Adelaide-based Beach Energy has launched an unconditional $75 million on-market takeover for West Perth-based Impress Energy, terminating a merger plan.
Adelaide-based Beach Energy has launched an unconditional $75 million on-market takeover for West Perth-based Impress Energy, terminating a merger plan.
In a statement to the Australian Securities Exchange, Beach said that the takeover offer replaced the previously announced merger between the two companies via a scheme arrangement.
Beach said that it had launched the offer because Victoria Petroleum had increased its holding in Impress to 20 per cent and indicated its intention to vote against the merger proposal.
Under the terminated agreement Beach offered 8.25 cents per Impress share.
The new offer is 8.5 cents per share for each Impress share Beach does not own.
Beach currently has a 19.9 per cent stake in Impress through on-market purchases and the sale of shares by Impress directors Eddie Smith and John Gillon.
Beach is an oil and gas explorer with more than 300 exploration and production tenements in Australia, Egypt and Tanzania.
Impress also has an oil and gas focus, primarily in the Cooper Basin.
Beach said it had increased its holding in Impress Energy to above 37 per cent following strong on-market acceptance of the alternate bid.
"Beach, through its broker Euroz Securities, has increased its relevant interest in Impress to above 30 per cent through on-market buying," the company said.
State One Stockbroking energy analyst Peter Kopetz said the change from Beach may have been prompted by strong share gains by Impress since the offer was announced last month.
"I think it is a change of tack to ensure that even if they don't take full control of Impress, they can get quite a few shares out of it," Mr Kopetz said.
The original agreement between the two companies was entered into on November 22.
Shares in Impress closed up 8.97 per cent at 8.5 cents, while Beach was up 0.5 cents at 71 cents.
See company statement below:
Beach Energy Ltd (ASX: BPT, "Beach") announces a recommended and unconditional on-market cash offer ("Offer") for all of the issued and outstanding shares of Impress Energy Ltd (ASX: ITC, "Impress") that it does not own.
The Offer price is 8.5 cents per share and the Offer is unconditional. Beach has instructed its broker, Euroz Securities Limited, to purchase at the Offer price, every Impress share for sale during the period from the date of this announcement to the close of the Australian Securities Exchange ("ASX") on 24 January 2011, unless extended or withdrawn.
The Offer values Impress at $75 million and replaces the previously announced merger between Beach and Impress via a scheme of arrangement. Beach and Impress have agreed to terminate the merger implementation agreement entered into on 22 November 2010 on the basis that the Offer by Beach is made.
Beach currently holds a 19.9% stake in Impress through on-market purchases and the sale of shares by entities associated with Mr Eddie Smith, Impress' Chairman, and Mr John Gillon, an Impress Director.
The Offer price represents a quarter of a cent increase on the merger proposal price under the scheme of arrangement and a 39% premium to the one month volume weighted average price ("VWAP") of 6.1 cents per share before the announcement of the proposed merger on 22 November 2010.
The Offer has been launched as a result of the Victoria Petroleum NL (ASX: VPE, "VicPet") announcement that it increased its holding in Impress to 20% and stated its current intention to vote against the scheme of arrangement.
In seeking to block the scheme of arrangement, VicPet made it clear in a statement to the ASX that it did not presently intend to make a competitive takeover bid for Impress.
Beach Managing Director Reg Nelson said his Board considered VicPet's intentions to be contrary to the interests of other Impress shareholders and put at risk the opportunity for Impress shareholders to monetise their investment.
"We believe VicPet's recent actions do not deliver the best outcome for Impress shareholders and the on-market cash offer proposed by Beach is the best way for Impress shareholders to realise the value of their investment," said Mr Nelson.
"By making this offer, Beach is extending an opportunity for all Impress shareholders to have access to a slightly improved financial return than they would have enjoyed if the scheme were to have succeeded."
As of 3 December 2010, Beach has an available cash balance of approximately $189 million that provides the company with a clear ability to fund the Offer from its existing cash reserves.
The Offer will enable Beach to consolidate its position as the largest mid cap player in the Cooper Basin which is in line with Beach's stated growth strategy to double production and reserves in 2-5 years.
DETAILS OF THE OFFER
The Offer is an unconditional cash offer of 8.5 cents per Impress share.
The Offer can be accepted by instructing your broker to sell your shareholding to Beach through its broker for the Offer, Euroz Securities Limited.
The Offer can be accepted by selling on the ASX immediately, allowing three trading days for receipt of cash.
The Offer represents a significant premium to the price that Impress was trading at prior to Beach announcing its intention to merge with Impress via a scheme of arrangement on 22 November 2010.