Oil and gas deal

Capricorn ditches Tullow in favour of NewMed

Capricorn Energy
Capricorn Energy shareholders were unhappy about the Tullow deal

Capricorn Energy, the Edinburgh-based explorer formerly known as Cairn Energy, said it was no longer proceeding with a planned merger with Tullow Oil and will instead merge with Israel’s NewMed Energy.

The switch of partner follows investor opposition to its all-share sale to Tullow, worth $827 million, which was announced in June.

Under the terms of the transaction, Capricorn shareholders would have been be entitled to receive 3.8068 new Tullow shares for each of their shares.

Capricorn said today that under the terms of the new deal agreed with NewMed, its shareholders will own 10.3% of the enlarged group and receive a special dividend of $620m, equivalent to £1.72 a share.

Capricorn chair Nicoletta Giadrossi said: “The board has engaged in a robust and dynamic process to evaluate options for Capricorn and considered a broad range of external factors and market conditions.

“The combination with NewMed and a cash special dividend represent the delivery of significant value for Capricorn shareholders. We believe this is a compelling transaction which combines near term value realisation with ongoing participation and value creation in a world class gas company.”

Capricorn shares were up 4.2% on the news at 249.60p.

As Cairn Energy the company was founded by former Scotland rugby international Bill Gammell.

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