Oil and gas explorer Warrego Energy (ASX:WGO) has revealed its consideration of an offer from Hancock Energy, which is to sell all its fully paid ordinary shares at 23 cents each.
This offer comes after the company entered into a Scheme Implementation Deed (SID) with Beach Energy Limited (ASX:BPT) which consists of an agreement for Beach to acquire all issued shares of Warrego for 20 cents each.
WGO is considering the takeover offer, with the Warrego board set to make its recommendation ‘in the absence of a superior proposal’, though no ultimate decision has yet been made and the company has advised it will update shareholders when more information becomes available.
Warrego shares were up as high as 16% earlier on Thursday morning. This rally sent the WGO share price soaring 112% over the ASX average annual benchmark, and 121% up on its own annual average.
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Hancock’s offer to Warrego
Warrego Energy has revealed the new and exciting offer from rival company Hancock Energy to acquire all WGO fully paid ordinary shares, priced at 23 cents a share in a takeover bid.
While the Warrego board is putting some serious consideration into the offer, it must also take care with the existing scheme proposal – the Scheme Implementation Deed (SID) – from Beach Energy that was announced in early November.
The Beach scheme was put to Warrego at the price of 20 cents a share, and under SID requirements Beach has the right to exercise a matching offer within five business days before Warrego’s board can make any definite counter agreements for the competing proposal from Hancock.
Hancock’s offer is subject to a “Pre-Emptive Rights Condition”, meaning Warrego’s Board must recommend in its Target Statement that Warrego shareholders accept the Hancock Takeover Offer in the absence of a superior proposal.
However, Hancock’s takeover offer is not subject to any minimum acceptance conditions.
“The Warrego Board, in consultation with its advisers, will consider the Hancock Takeover Offer and will update shareholders in due course,” the company stated.
“As shareholders would be aware, on 14 November 2022, Warrego announced a scheme proposal from Beach Energy Limited (ASX: BPT) (Beach). Under the Beach scheme proposal, Warrego shareholders would receive cash consideration of $0.20 per share in return for the transfer of their Warrego shares to Beach and, if Warrego’s Spanish assets are sold, and such sale completes, within 12 months of implementation of the Scheme, their pro-rata share of the proceeds of such sale net of costs and taxes.”
Previously Warrego revealed its board has been looking to ‘unlock value for shareholders’ by way of exploring ownership and control opportunities for the company many months before Beach put its SID on the table.
Warrego had sought offers from both Beach and Strike Energy initially, however after refusing Beach’s first offer ($0.17 per Warrego share), the revision was submitted by Beach and knocked Strike’s proposed scrip consideration ($0.194 per share) out of the competition.
At present the directors of Warrego are holding onto their existing recommendation for the Beach scheme proposal.
Shareholders are advised against taking action until receiving further advice from the company.
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Regards,
Mahlia Stewart
For Money Morning
