New Med Energy’s bid to takeover British oil and gas operator Capricorn Energy took another dramatic turn, after the Israeli energy firm announced plans to press ahead with its proposed merger while leaving itself wriggle room “to examine alternative strategic options.”
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.
Shareholders are set to vote on whether to approve the deal on 1 February, while an activist ballot to oust Capricorn’s leadership will also take place later in the day.
This would include removing seven directors and appointing six new ones.
In a press statement, New Med confirmed it was “continuing to work to advance the merger and to obtain all needed approvals in Israel and England,” and that it would push for shareholder approval this quarter.
It argued the proposed deal was “the most compelling option for all relevant stakeholders”.
The merger would create a “differentiated, gas-led business of scale, offering growth, regular returns to shareholders and a path through the energy transition, with a longer-term position in renewables and the hydrogen economy”.
The mooted merger values Capricorn at $338m (£277m) alongside a $620m special dividend – with the firm’s market capitalisation estimated at $940m at the close of last week.
The Capricorn-New Med merger would create an Israel-Egypt focused gas producer, including New Med’s stake in Israel’s giant Leviathan offshore field
However, the deal has faced a sharp backlash from some of its biggest shareholders, concerned it does not represent full value for investors – with the company’s third largest stakeholder Palliser arranging a ballot to remove Capricorn’s senior team.
Palliser published a letter last week signed by 32 per cent of investors in Capricorn calling for the deal to be reconsidered – claiming to have 40 per cent backing.
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.