Seplat Petroleum Development Company Plc (Seplat) yesterday announced that it has reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Eland Oil and Gas Plc.
The company in a statement said the deal will be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act of 2006
According to Seplat, “Under the terms of the acquisition, each Eland’s shareholder will be entitled to receive: for each Eland share 166 pence in cash.
The acquisition values the entire issued and to be issued ordinary share capital of Eland at approximately £382 million on a fully diluted basis, and represents a premium of approximately 28.5 per cent to the closing price per Eland Share of 129.2 pence on October 14, 2019 (being the latest practicable date prior to this announcement); a premium of approximately 32.6 per cent to the three-month volume-weighted average price per Eland share as of October 14, 2019 of 125.2 pence; and a premium of approximately 32.7 per cent to the six-month volume-weighted average price per Eland share as of October 14, 2019 of 125.1 pence”.
In addition, it said Eland shareholders on the register at the close of business on October 18, 2019, will be entitled to receive and retain the interim dividend of 1 penny per Eland share to be paid on October 31, 2019.
The statement read in parts, “The Eland directors, who have been so advised by Evercore as to the financial terms of the acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Eland directors, Evercore has taken into account the commercial assessments of the Eland Directors. Evercore is providing independent financial advice to the Eland directors for the purposes of Rule 3 of the Code.
“Accordingly, the Eland directors unanimously intend to recommend that Eland shareholders vote in favour of: (i) the Scheme at the Court Meeting; and (ii) the Resolution at the General Meeting, in each case as the Eland Directors who are interested in Eland Shares have irrevocably undertaken to do in respect of those Eland Shares in respect of which they are able to control the exercise of voting rights, amounting in aggregate to 609,657 Eland Shares and representing approximately 0.28 per cent. of the issued share capital of Eland, “.
It added, “In addition to the above-mentioned irrevocable undertakings from the Eland Directors, Seplat has also received irrevocable undertakings from Helios Natural Resources Limited (“Helios”), Lombard Odier Asset Management (Europe) Limited (LOAME) and Richard I Griffiths to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting in respect of a total of 129,118,048 Eland Shares, representing approximately 59.89 per cent. of the existing issued ordinary share capital of Eland.
“Therefore, as at the date of this Announcement, Seplat has received irrevocable undertakings to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting with respect to a total of 129,727,705 Eland Shares, representing approximately 60.17 per cent of the existing issued ordinary share capital of Eland. Further details of the abovementioned irrevocable undertakings are set out in Appendix III to this Announcement.”
It disclosed that the cash consideration payable under the acquisition is being wholly funded through a combination of existing cash resources of Seplat and a new loan facility available to Seplat.
It added that the acquisition will be put to Eland shareholders at the court meeting and at the general meeting.
Commenting on the Acquisition, CEO of Eland, George Maxwell, said: “This recommended offer from Seplat represents the culmination of a very successful journey by Eland, the management team and all of its stakeholders. Since founding Eland, we have, jointly with our partners in Elcrest, acquired our interests in OML 40, a non-producing asset, achieved an all-time record production on this asset and become a significant independent producer in Nigeria’s E&P landscape and one of the biggest oil producers on London’s AIM market. Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers and the AIM Oil & Gas Index. This transaction represents a record share price for Eland and crystallises Eland’s stated goal to maximise shareholder value.”
On his part, Chairman of Eland, Russell Harvey commented: “We are pleased to announce this recommended Acquisition by Seplat. Eland’s management team has done an excellent job executing our strategy. We have demonstrated a strong track record of operational delivery and value creation in Nigeria from our high-quality assets. This offer allows Eland Shareholders to benefit from an accelerated and enhanced realisation of this value through a cash offer at a significant premium to the current market value. In addition, the business will benefit from the opportunity to become part of a more significant player in the Nigerian oil and gas market. For these reasons, the Eland Board unanimously intends to recommend the offer to Eland Shareholders.”
Chairman of Seplat, Dr. Bryant Orjiako said: “Since Seplat acquired its first blocks and commenced production in 2010, we have increased oil and gas production and grown reserves in each year of operation, delivering significant growth and value for our shareholders. We firmly believe that Eland is a complementary fit with Seplat and that there will be enhanced scale and a wider range of capabilities made available to the enlarged group through the combination. This acquisition signals the next step in our journey that will underpin Seplat’s ambition to be the leading independent E&P in Nigeria.”
CEO of Seplat, Austin Avuru, commented: “We are pleased to have reached an agreement to acquire Eland and its portfolio of assets that will enhance our existing operations. Eland is an excellent fit with Seplat and the combination should achieve for us growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland shareholders.
“The acquisition, made possible by our robust operational platform and headroom in our capital structure, is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near term production with cash flow and reserves potential. The acquisition reinforces Seplat’s status as one of Nigeria’s leading indigenous, independent E&Ps and will create a Nigerian E&P champion with the footprint and technical capabilities to further grow and consolidate in Nigeria.”