Photo by: Strike Energy
PERTH (miningweekly.com) – ASX-listed Strike Energy has made the case for its own offer for takeover target Warrego Energy, saying a merger between the two companies would create a premier listed Perth basin pure play with a progressive sustainable development strategy across gas, fertilisers and renewables.
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.
Strike also offered to pay Warrego shareholders an additional scrip consideration for the company’s Spanish assets, if sold within 12 months of the transaction.
However, Warrego this week signed a scheme implementation deed with fellow listed Beach Energy, which is 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.
While Strike on Tuesday acknowledged the competing proposal, the company said in a statement that its own offer for Warrego represented a superior result for that company’s shareholders.
Strike argued that a merger between itself and Warrego would provide a higher value per share for Warrego shareholders at the close of trading, after Beach’s initial offer, and provided retained ownership in a uniquely positioned energy business. The Strike offer would also provide stewardship of value with the offer of a Warrego director to join the merged entity’s board, and oversee the Spanish asset sale.
“Strike is disappointed with Warrego’s decision as it continues to believe its proposal represents a superior result for Warrego shareholders. Strike’s proposed merger would create a uniquely positioned ASX listed investment opportunity with a dominant position in the Perth basin armed with its sustainable energy and fertiliser development strategy, which would allow Warrego shareholders to participate in the joint upside across the portfolio,” the company said on Tuesday.
“The proposed merger of Strike and Warrego provides an attractive opportunity to deliver compelling value accretion to both Strike and Warrego shareholders as historically demonstrated by similar ASX listed transactions. The merged entity would become, what Strike considers to be, the premier Perth basin investment opportunity and a national leader in sustainable energy development with its unique integrated gas, fertiliser and renewables strategy,” said Strike MD and CEO Stuart Nicholls.
“The merger offers a path to maximise value for both Strike and Warrego shareholders, opportunity for roll over tax relief and continuation to participate in a focussed business with impending cashflows. As a result of the merger, Strike expects that it can accelerate, maximise and optimise the gas production, cashflows and capital, whilst reducing the carbon footprint of the Erregulla domestic gas project.
This is a unique opportunity for both sets of shareholders and we implore Warrego’s board to reconsider their recommendation to support the Beach proposal, reassess Strike’s proposed merger and declare it as a superior proposal,” he added.