05/11/2008 - 14:45

KPMG lowers Incremental share value

05/11/2008 - 14:45

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Incremental Petroleum says its second suitor TransAtlantic could still alter its bid as another independent report lowers the value of the takeover target's shares.

KPMG lowers Incremental share value

Incremental Petroleum says its second suitor TransAtlantic could still alter its bid as another independent report lowers the value of the takeover target's shares.

In its supplementary target statement out today, Incremental said TransAtlantic had confirmed its intention to bid and indicated that a bidder's statement will be lodged on November 27.

The lodgment date could put pressure on original suitor Cooper Energy, with its takeover offer scheduled to close this Friday, but that could be extended depending on the corporate watchdog.

Yesterday, Cooper announced that the Australian Securities and Investments Commission had asked the company to consider extending its takeover offer, which was declared final a fortnight ago and a week before TransAtlantic announced its intention to bid.

Cooper agreed to ASIC's request and it is understood that ASIC will now apply to the Takeovers Panel for an extension, which is believed to be around two weeks.

If that extension is granted, Cooper's offer will still close around a week short of TransAtlantic's lodging date.

TransAtlantic is currently proposing to offer $1.05 cash for each Incremental share, while Cooper is offering 3.1 of its shares or 1.9 shares plus 50 cents cash.

Meanwhile, independent expert KPMG has lowered the fair value assessment of Incremental's shares, now valued at between $2.41 and $3.05.

Last month in its first report, KPMG valued Incremental shares at between $3.39 and $4.18.

KPMG said it had taken into account the movement in world oil prices, exchange rate fluctuations, and the continued volatility in global financial markets.

Cooper managing director Mike Scott said Incremental shareholders should be "horrified" at the latest valuation.

"Incremental shareholders should be horrified that their Directors have for the last four weeks led them to believe that their shares are worth up to $4.18 and have now presented them with a dramatically different view just two days before Cooper's Takeover Offer is due to close," Mr Scott said.

"The revised valuation is almost 30% lower than the previous valuation on which Incremental based its rejection of Cooper's offer."

KPMG reaffirmed its rejection of Cooper's takeover bid, saying it does not view it as fair and reasonable, while it listed hypotheticals in relation TransAtlantic's cash offer.

KPMG said TransAtalntic's offer is good for shareholders chasing cash to either reduce debt or make other investments, however it did not expose shareholders to the potential upside of Cooper's portfolio.

Incremental directors said TransAtlantic's offer price is currently in the range of it's share price but did not provide any premium.

However Incremental did point out that TransAtlantic's bid is not final and could still be varied.

Incremental directors reiterated its 'take no action' stance in relation to the TransAtlantic offer and that shareholders reject Cooper's offer.

Shares in Incremental closed up 0.5c to $1.055 while shares in Cooper closed unchanged at 31c.

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