Oil and gas firm Anzon Australia has recommended its shareholders accept larger rival Roc Oil's $349 million cash and script takeover offer.
Roc offered 0.792 of its own shares and 5 Australian cents in cash for Anzon Australia. The offer is worth about $0.94 a share based on current market valuations, according to Reuters calculations, down from the initial implied value of $1.65 a share when Roc first launched the bid in June.
In its first response to the takeover, Anzon said that although Roc's share price has fallen sharply since June, a majority of the board at Anzon Australia believe that the relative value in a combined entity was reasonable.
"On balance, Anzon Australia shareholders will achieve greater value for their Anzon shares by accepting the Roc offer than if they reject the Roc offer and remain as minority shareholders,'' Anzon said in a statement.
Roc won a 53.1% controlling stake in Anzon Australia last week after shareholders from London-based parent Anzon Energy approved the merger through a scheme of arrangement.
Shares in Roc, which has a market value of about $336 million, gained 3.7%, or 4 cents, to close at $1.13. Hit by falling oil prices and exploration disappointments, Roc's stock has fallen about 73% since mid-June when it first launched the takeover.
Anzon Australia's shares lost 1.6% to close at 91 cents, indicating that investors were not expecting a higher offer.
Roc acquisition of Anzon, which has a 40% stake in the Basker Manta Gummy oil field off Victoria, would increase its oil production by an additional 4000 barrels per day (bpd).
Roc, which has producing assets in Australia but is increasingly focused on China and West Africa, currently produces 10,408 barrels of oil equivalent (boe) per day.
Roc has said that the deal would also more than double its reserve base to 47 million to 50 million boe and more than double production by 2010 to 20,000 boe per day.
Reuters
