Capricorn Newmed merger hits the rocks as activists win boardroom battle
Capricorn Energy’s proposed merger with Newmed has all but collapsed, after activist investor Palliser secured all six of its nominees on to the new company’s board.
The activist investor enjoyed a straight flush at yesterday’s crucial vote on Capricorn Energy’s future, with Hesham Mekawi, Christopher Cox, Maria Gordon, Craig van der Laan, Richard Herbert and Tom Pitts appointed to the board with immediate effect.
Capricorn’s incumbent chief financial officer James Smith resigned from the board the morning before the vote, as did non-executive director Keith Lough.
This follows the exodus of four former board members last week including chair Nicoletta Giadrossi and chief executive Simon Thomson, who were both proponents of the merger.
The boardroom power struggle follows protracted disputes between shareholders over Capricorn’s merger plans – first with Tullow Oil and then with Newmed.
The Capricorn-Newmed merger would have created a major Israel-Egypt focused gas producer.
However, shareholders have questioned whether the deal represents value for money, with the merger pricing Capricorn at $338m (£277m) alongside a $620m special dividend.
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 also both announced plans to vote against the Newmed merger, with the firms having 3.8 and 2.1 per cent stakes in Capricorn respectively.
Capricorn had originally planned to hold a vote on the merger with New,ed yesterday; however, this was pushed back three weeks to 22 February after the exodus of senior board members last week.
The new board said it would assess the merits of the deal, but it is widely expected to recommend against its approval.
They will also be conducting a comprehensive strategic review of Capricorn’s business and the future of the company.
Shares in the FTSE 250 company are up 0.42 per cent in this morning’s trading.