IOG urges shareholders to take no action on RockRose’s “opportunistic” takeover bid

IOG's North Sea assets

Following RockRose’s unsolicited takeover approach for compatriot oil company Independent Oil and Gas (IOG), IOG has reiterated its rejection, deeming the proposal opportunistic. 

Namely, RockRose approached IOG’s board with a proposal for an all cash takeover offer for IOG.

The terms of the proposal for IOG were that RockRose would offer 20p in cash per ordinary share for the entire issued and to be issued share capital of IOG which would value the total share capital of IOG at £26.6 million (or about $35M).

According to RockRose, the possible offer, if made, would represent a premium of 51 per cent to the closing price of IOG on February 26, the day of the initial approach by RockRose to IOG and a premium of 58 and 44 per cent to the 30 and 60 day volume-weighted average price (VWAP) respectively, up to the period ended February 26.

Following RockRose’s announcement about the proposal on Tuesday, IOG confirmed it had received and promptly rejected an unsolicited pre-conditional proposal from RockRose in respect of a possible cash offer for the entire issued share capital of the company at a price of 20 pence per IOG share.

IOG said that RockRose’s announcement contained a number of statements which the board found misleading and with which the board did not agree.

“Moreover, the board believes that this proposal is opportunistic and materially undervalues the company and does not attribute fair value to IOG’s assets, nor their significant future upside. The board therefore unanimously concluded to reject this proposal unequivocally,” IOG said.

In its approach, RockRose referred to IOG’s endeavors to find a partner to develop its Southern North Sea assets saying that any possible offer would remove the risk for IOG shareholders of a protracted or unsuccessful farm-out process.

RockRose further said: “Even in the event of a successful farm-out, RockRose considers it likely that significant funding and dilution risk would remain for IOG shareholders as they sought to fund their remaining share of the assets.

“RockRose also expects that it is likely that IOG would have to give up operatorship of the assets as part of any farm-out process thus leaving it with a non-operating minority interest.”

Responding to RockRose’s statements, IOG said: “The board continues to focus its efforts on unlocking value in the company by securing a farm-out partner for its core project to provide funding optionality in parallel with IOG’s stated capital markets funding plans.”

IOG also noted that the board’s rejection of RockRose’s approach was given with the full support of London Oil & Gas Limited.

IOG further acknowledged that RockRose is required to either announce a firm intention to make an offer for IOG no later than 5.00 p.m. on April 2, 2019, or announce that it does not intend to make an offer. The deadline for making an offer will only be extended with the consent of the Panel on Takeovers and Mergers.

IOG concluded its statement by reminding its shareholders that there can be no certainty that an offer will be made by RockRose for IOG, nor as to the terms on which any such offer may be made. IOG also urged its shareholders to take no action in respect of this proposal at this time.

Offshore Energy Today Staff

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