Newmed reveals chance of Capricorn merger has ‘significantly decreased’ after boardroom exodus
The chance of Newmed’s proposed £277m merger with Capricorn Energy going ahead has “significantly decreased”, admitted Newmed, after a number of Capricorn’s top executive quit this morning.
The Israeli gas producer said it is considering “strategic alternatives”, with the aim of maximising value for shareholders.
It comes after the dramatic exit of both Capricorn’s chief executive and chairman alongside three other board members earlier today.
This has seen the crunch shareholder vote on the proposed takeover being pushed back three weeks to 22 February.
Newmed said: “In view of these developments and the resignation of most of the Capricorn board members, the partnership estimates that the probability for the closing of the transaction has significantly decreased.
“As stated in the immediate report of January 15, 2023, the partnership continues to examine strategic alternatives, with the aim of maximizing value for the unit holders in the partnership.”
The Capricorn-Newmed merger would have created a major Israel-Egypt focused gas producer.
However, shareholders have questioned whether the deal represented value for money, with merger pricing Capricorn at $338m (£277m) alongside a $620m special dividend.
Activist shareholder Palliser published a letter earlier this month, signed by 32 per cent of investors in Capricorn, calling for the deal to be reconsidered.
Legal & General Investment Management and VR Global Partners have also both announced plans to vote against the New Med merger, with the firms having 3.8 and 2.1 per cent stakes in Capricorn respectively.
The protracted takeover saga has dragged on for four months since the deal was first unveiled last September, after New Med gazumped rival Tullow Oil – which had been pushing for its own merger with Capricorn last summer.
Nathan Piper, head of oil and gas research told City PM that the proposed deal suffered from the acrimonious collapse of the Tullow merger.
He said: “If the Newmed deal had not been preceded by the proposed Tullow transaction there might have been the potential for the deal to have gained support from shareholders given a headline material return of cash and combination with a high quality asset base.
“However under further scrutiny, shareholders appear ultimately unconvinced of the merits of the latest proposal. As Newmed have made clear they do not intend to change the terms of the transaction as a result it is unlikely to proceed.”
Palliser welcomed today’s developments, although it criticised the “artificial deadline” of a vote on 22 February.
A spokesperson said: “We are confident that today’s announcement marks the first step towards governance reform and a new leadership team focused on optimising value and delivering real growth in Egypt.”
Shares in Capricorn were up 0.16 per cent this afternoon on the FTSE 250 at close of play.