Australia’s independent oil company ROC has withdrawn from a merger agreement reached in April with Horizon Oil, after receiving a better offer from Fosun.
China’s Fosun has offered AUD 0.69 per ROC Share valuating the target company at approximately A$474 million. The offer represents a 52% premium to the closing price of ROC shares on 23 April 2014 which was the last trading day prior to the announcement of the Horizon merger proposal.
The ROC directors unanimously recommend that ROC shareholders accept the Fosun Offer in the absence of a superior proposal.
In making their recommendation, ROC says its directors have carefully considered the Fosun Offer and determined in good faith that the Fosun Offer is more favourable to ROC shareholders than the proposed merger with Horizon.
ROC Chairman, Mike Harding said: “The proposal to purchase all of ROC’s shares for cash is superior when considered against the alternative merger of equals with Horizon and offers a significant premium to share price performance. In reaching our conclusion that the Fosun Offer is in the best interests of shareholders and a superior proposal as defined in the Horizon Merger Implementation Deed, the Board has considered a number of alternatives, including the standalone value of ROC and the value of pursuing merger with Horizon in accordance with its proposed terms. This cash offer price is consistent with the valuation ranges provided by the Independent Experts’ reports produced for the Horizon merger. Following assessment of the available information and alternatives, the Board has unanimously concluded that the offer is a superior option and a low risk route to maximise immediate value for our shareholders.”
Fosun explained the move would enable the Group to enter the upstream oil & gas industry and acquire oil & gas assets.
The proposed takeover agreement by Fosun is conditional upon ROC exercising its rights under that deed to terminate the merger proposal with Horizon, as the Fosun only wants to acquire ROC itself.
Horizon respects ROC decision
In a separate statement, Horizon Oil said it noted the Fosun takeover offer for ROC shares and the company’s CEO wished ROC all the best.
Commenting on this development, Brent Emmett Managing Director and Chief Executive Officer of Horizon Oil said: “While the Board of Horizon Oil saw significant value potential in creating what we considered would be a leading Asian mid-cap E&P company, we note and respect Roc’s decision to be acquired for cash, as a low risk means of achieving immediate value for its assets, bringing an end to Roc’s 15 year history as an ASX listed oil and gas company. We wish Roc and its new owners well with their future endeavours.”