Australian oil company AWE has received a takeover offer from Mineral Resources, following a recent takeover bid made by China’s CERCG.
Mineral Resources has offered to acquire all AWE shares via a Scheme of Arrangement.
If accepted, each AWE shareholder will receive as default consideration $0.415 paid in cash and between 0.0198 and 0.0277 Mineral Resources shares per AWE share. Shareholders will be provided with the ability to elect to receive 100% cash or 100% scrip, with actual allocation subject to scale back to ensure total transaction consideration paid is 50% cash and 50% scrip.
If the Scheme is implemented, based on the current trading price of Mineral Resources’ shares, AWE shareholders will own approximately 6.8%3 of the total issued share capital of the combined group. The transaction is subject to the approval of AWE shareholders at a shareholder meeting expected to occur in mid-April 2018, as well as Court approval and other conditions.
AWE Board of Directors said on Thursday that the Mineral Resources proposal was in the best interests of AWE shareholders and unanimously recommend that all AWE shareholders vote in favor of the Scheme.
Based on consideration of $0.83 per share, the transaction values AWE at a market capitalization of $526.0 million. This represents a premium of 52.3 percent to AWE’s closing price of $0.545 per share on 29 November 2017, being the day prior to the disclosure that China Energy Reserve and Chemical Group Australia (CERCG Australia) had approached AWE with a proposal to acquire the company. This bid was dismissed by the AWE directors as not attractive enough.
The Chinese firm then withdrew the offer, but came back earlier in December, relaunching a takeover bid of a $0.73 per AWE Share directly to the shareholders with an off-market bid. AWE urged shareholders to take no action “until they receive the AWE Board’s formal recommendation.”
AWE Limited, the target company, noted the “unsolicited conditional off-market takeover bid” for AWE at $0.73 per share, and has urged shareholders to take no action in relation to the offer or “any document received from CERCG Australia until they receive the AWE Board’s formal recommendation.”
Meeting in April
Back to the Mineral Resources offer, and the proposed acquisition, Kenneth Williams, Chairman of AWE said:”The acquisition price represents a highly attractive opportunity for AWE shareholders to realize a material premium for their AWE shares. Shareholders who receive Mineral Resources shares can choose to remain invested in the larger and more liquid Mineral Resources or they can choose to sell their new Mineral Resources shares for cash”.
David Biggs, CEO and Managing Director of AWE said, “We are proud of the work we have done to reshape AWE and, in particular, the value which has been created by our Waitsia project. This represents a very good opportunity for shareholders to crystallize compelling value.”
AWE shareholders will be asked to vote on the Scheme at a meeting expected to be held in mid-April 2018.