Capricorn to consider options to Tullow deal
Capricorn Energy boss Simon Thomson said the Edinburgh-based company is exploring “alternative transactions” while continuing to support the proposed £1.4bn all-share merger with Tullow Oil agreed in June.
His comments in a brief statement to the stock market, come amid calls for the board to pull out of the tie-up.
In a statement, Mr Thomson said: “The board continues to believe that the proposed merger with Tullow can deliver significant long-term value for shareholders through creating a leading, Africa-focused energy company.
“The board is also mindful of the impact of external factors and market conditions and is, as always, assessing all options to maximise value for shareholders.
“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.”
Palliser Capital, which has a stake of more than 5% in the FTSE 250 company – formerly Cairn Energy – last month wrote to its directors advising them to withdraw their recommendation for the proposed merger and instead initiate a strategic review of Capricorn.
“The proposed merger appears to us to be a poorly disguised nil-premium takeover of Capricorn by Tullow,” the letter, signed by James Smith, Palliser chief executive, said.
The letter added: “We firmly believe that Capricorn’s standalone value is at least 330p per share, representing a 50% upside to the current share price and implying that the proposed merger represents a value giveaway of over $500 million.”
The Tullow deal was expected to complete by the end of the year, although Capricorn shareholders are said to be unlikely to back it in its current form.
Last month, Jamie Sherman, co-chief investment officer at hedge fund Kite Lake Capital, a 7% holder in Capricorn, said: “The simple fact is, we don’t want Tullow paper.”
In his statement, Mr Thomson, added: “Almost one year since the acquisition of the Egypt business, we continue to make good progress and have been successful in prioritising oil and liquids production growth while current commodity prices remain high.
“We were delighted to return more than $500 million to shareholders following receipt of the India tax refund at the beginning of the year.”
At 9.30am, shares in Capricorn Energy were trading 7.60p (3.24%) higher at 241p.