PERTH (miningweekly.com) – ASX-listed energy major Beach has usurped fellow listed Strike Energy’s play for junior Warrego Energy.

Strike last week confirmed that it had submitted a confidential, non-binding indicative all-scrip merger proposal to the Warrego board, offering 0.714 of its own shares for each Warrego share held.

Additionally, if Warrego’s Spanish assets were sold, and the sale completed within 12 months of Strike obtaining control of the junior company, Strike offered to pay Warrego shareholders an additional scrip consideration for these assets.

Under Strike’s proposal, Warrego shareholders would own a 30.5% interest in the combined company.

A day later, Beach Energy submitted a non-binding indicative offer to Warrego, offering 20c a share in cash for each Warrego share held, as well as an additional scheme consideration should Warrego’s Spanish assets be sold within 12 months of completing the transaction.

Beach and Warrego on Monday entered into a scheme implementation deed.

Beach told shareholders that its 20c-a-share offer for Warrego represented a 36% premium to the takeover target’s one-month volume weighted average share price, and a 14% premium to the company’s closing share price on November 19.

Beach CEO Morné Engelbrecht said the proposal to acquire Warrego provides a unique opportunity to complement Beach’s growth strategy in the Perth basin while delivering compelling cash value recognition for Warrego shareholders.

“Beach has a significant acreage position in the Perth basin. We are investing heavily to bring new gas supply to market, including Waitsia Stage 2 liquefied natural gas volumes and gas exploration drilling which is soon to commence. The proposed acquisition of Warrego would complement our asset portfolio and provide further optionality to develop new gas supply for many years to come.”

Warrego’s assets in Australia include a 50% interest in an exploration licence in the Perth basin, which includes the West Erregulla gas project, as well as full ownership of a further 8 700 km² of exploration acreage. In Spain, the company holds an 85% working interest in the Tesorillo gas project and a 50.1% working interest in the El Romeral gas-to-power facility in the Seville region.

Engelbrecht said on Monday that the company was pleased to have reached the agreement with Warrego, and was looking forward to completing the transaction.

The scheme implementation deed is subject to a number of conditions, including Warrego shareholder approval, as well as court approvals and an independent expert concluding that the offer is in the best interest of Warrego shareholders.

The board of Warrego have unanimously recommended that shareholders accept the offer, in the absence of a superior proposal, and subject to an independent expert concluding that it was in the best interest of shareholders.

“This transaction provides an attractive outcome for our shareholders, with the certainty of cash proceeds. The premium offered to our share price recognises the strong underlying value of our assets as well as providing the ability to realise further upside from the future potential sale of Warrego’s assets in Spain,” said Warrego MD and CEO Dennis Donald.

The transaction is targeted for completion in early March next year.