Sunday, February 5, 2023

Capricorn investors skeptical of merger deal with Tullow

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Capricorn Energy’s intended £1.4 billion all-share merger with Tullow Oil seems to be on a shaky path as its Chief Executive Officer (CEO) Simon Thomson recently hinted that the company is considering new investors.

His comments have emerged amid shareholders’ calls for the board to pull out of the tie-up.

Speaking on a conference call on Capricorn’s first-half results, Thomson said it continued to believe the merger would provide value for shareholders. However, there are alternatives.

“The company is exploring a number of expressions of interest relating to alternative transactions and is engaging with those parties expressing interest to evaluate potential outcomes,” Thomson said.

Palliser Capital, which has a stake of more than 5% in Capricorn – penned a letter to its directors advising them to withdraw their recommendation for the proposed merger and instead initiate a strategic review of Capricorn.

Its Chief Executive, James Smith said that the proposed merger appears to us to be a poorly disguised nil-premium takeover of Capricorn by Tullow.

Now, it appears that the intended year-end shareholder vote may be delayed.

Tullow announced the proposed merger in June. It said it agreed with Capricorn on the terms of an all-share merger. The new company would have a material and diversified asset base and a portfolio of investment opportunities delivering visible production growth, Tullow said.

Both assets have operations in multiple regions of the world. Of note, the merged company would have assets in Guyana because, while it is Africa focused, Tullow partly owns two blocks offshore Guyana.

Tullow has a 60% operated interest in the Orinduik Block and a 37.5% non-operated interest in the Kanuku Block.

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