The market didn’t like Roc Oil Company’s $900 million in takeovers for Anzon Australia and its British parent.
Roc has agreed to buy the UK parent for around $300 million and is offering around $612 million (based on last Friday’s closing prices) for Anzon Australia.
Roc shares were sold off heavily and they fell 11.4% or 23c to $1.79, while Anzon’s shares rose 8.5c to $1.39.
So the market sees one winner only from this deal: shareholders in Anzon which was jilted at the altar earlier in the year when rival Nexus Energy didn’t go through with its $648 million offer.
Now Roc has popped up with an offer for Anzon after agreeing to buy control of its London listed parent, Anzon Energy.
Roc is offering 0.792 shares plus five cents cash for every Anzon share, valuing Anzon’s stock at $1.65.
The fall in the price of Roc shares saw the price of the offer drop to just over $1.41.
"This opportunity to combine Roc and Anzon for the benefit of both shareholder groups is both unique and compelling," Roc chairman Andrew Love said in a statement to the ASX yesterday morning.
Roc agreed to buy Anzon Energy Ltd. for $303 million and then bid for its 52%-owned Australian unit to add reserves and output.
Roc said it would pay 1.33 Roc shares for each share in Anzon Energy, or around $2.69 (or 130 pence). That compares with Anzon Energy’s last price of 96.5 pence.
Roc says that buying Anzon and its Australian unit will give it a share in production from Anzon Australia’s Basker-Manta oil venture off the southeast coast, to add to its output in Western Australia, the UK and Mauritania.
Mr Love said that the "enlarged company will occupy a rare space in the Australian and international oil and gas scene, and we are already focused on taking it to the next level”.
Should the Anzon Energy takeover proceed and the Anzon Australia offer fail, Roc will replace Anzon Energy as Anzon Australia’s majority shareholder and still control the Australian-listed company.
In its ASX statement Roc said that if successful, the Anzon Takeover Offer will deliver a number of advantages to shareholders of the merged group.
It said the main benefits included:
- Increased Production: production of approximately 14,500 barrels of oil equivalent per day (BOEPD) from interests in eight producing fields in Australia, China, Mauritania and the North Sea, five of which would be operated by the enlarged company.
- Increased Reserves: approximately 47 MMBOE1 net 2P oil reserves and best estimate gas and condensate resources.
- Increased Scale: a pro forma market capitalisation of approximately $1.2 billion. The enlarged company would be the 6th largest dedicated (non-integrated and conventional) oil and gas exploration and production company on ASX. In terms of 2P oil production and oil reserves, the enlarged company would be the 5th and 6th largest ASX oil company respectively. The enlarged company would be the largest non-FSU oil and gas company on AIM in terms of market capitalisation, reserves and oil production.
- Increased financial capacity: with combined unaudited cash flow from operations in 1Q2008 of approximately US$70 million from sales revenue of approximately US$133 million and a strong balance sheet.
- Increased Appraisal and Development Project Portfolio: the enlarged company would have an attractive and diverse array of appraisal and development opportunities located in Australia, China, Angola and Mauritania.
- Increased Exploration Potential: a unique exploration portfolio of global proportions, including substantial opportunities in Australia, West Africa and East Africa would reside within the enlarged company.
- Increased Liquidity: currently, ROC has approximately 299 million shares on issue, which will increase to approximately 596 million if both the AEL Scheme and AZA Takeover Offer are successfully implemented. The combined shareholder base of the enlarged company will exceed 20,000, which, together with the increased level of issued capital, should provide greater liquidity for the enlarged company.
- Strong Operating Ability: the enlarged company will occupy an unusual niche in the industry with a unique operating skill set ranging from onshore West Africa to offshore Australia and China, including unmanned and manned fixed platforms, as well as FPSO facilities.
- Like-minded Cultures: as an established, full cycle (exploration to production) operating company, ROC shares with Anzon many aspects of corporate culture, including a high standard with regard to health, safety, environment and community matters, as well as corporate governance.
- Capacity for Growth: the enlarged company would have the scale and financial capacity to pursue further organic and acquisition growth opportunities.
