Shell upped their bid for Cove Energy today to 220p which the Cove BoD’s have unanimously backed. Other bidders are said to be thinking through their options.
Cove has been in talks for sometime now since the first Shell bid at 195p. In april the company successfully completed the appraisal Drilling At Barquentine-4 adding more value to the business.
The sp is currently 225p suggesting that some think that PTT exploration (another bidder) may up their bid. The fact that the BoD’s have already ignored their bid in favour of Shells suggests that any new offer will need to be considerably more. Ultimately – it will be the shareholders that decide with their Votes.
Another company in takeover talks is Ithaca Energy. They too have been in discussions for some months now and I would expect an outcome of that to come sooner rather than later.
Takeover fever has quietened down since the Cove and IAE stories broke – and it can’t be long before some fresh new takeover stories come forwards. Question is… who’s next?
24 April 2012
RECOMMENDED CASH OFFER by Shell Exploration and Production (XL) B.V. (a wholly-owned subsidiary of Royal Dutch Shell plc)
for Cove Energy plc
* Further to the announcement of a possible offer by Shell Bidco for Cove on 22 February 2012, the boards of directors of Cove and Shell Bidco are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Shell Bidco for the entire issued and to be issued share capital of Cove. Shell Bidco is an indirect wholly-owned subsidiary of Shell incorporated in the Netherlands.
* Cove Shareholders who accept the Offer will be entitled to receive 220 pence in cash for each Cove Share.
* The Offer values the entire issued and to be issued share capital of Cove at approximately £1,120 million and represents a premium of:
* 134 per cent. to the Closing Price of 94 pence per Cove Share as of 12 December 2011, the last Business Day prior to the date of the announcement by Cove of its proposed sale of the Rovuma Area 1 Interest;
* 95.6 per cent. to the Closing Price of 112.5 pence per Cove Share as of 4 January 2012, the last Business Day prior to start of the Offer Period; and
* 42.4 per cent. to the Closing Price of 154.5 pence per Cove Share as of 21 February 2012, the last Business Day prior to the date of the Possible Offer Announcement.
* Shell’s decision to announce a recommended Offer for Cove fits with Shell’s strategic aim to drive forward with its investment programme to deliver sustainable and profitable growth. The proposed acquisition of Cove’s portfolio would mark Shell’s entry into exciting new hydrocarbon provinces, in Mozambique and Kenya, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa. Adding Cove’s assets to Shell’s portfolio would strengthen and further diversify Shell’s existing global LNG portfolio of production and development projects.
* The announcement of this recommended Offer follows the decision announced by Cove on 5 January 2012 to conduct a formal sale process for the company and the subsequent release of the Possible Offer Announcement by Shell Bidco and Cove. The formal sale process has now been concluded. The end of the formal sale process means that the data room which has been open to participants will be closed with effect from 7.00 am on 24 April 2012. Other potential offerors can still nonetheless announce competing offers for Cove.
* The Cove Directors, who have been so advised by Standard Chartered, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Cove Directors, Standard Chartered has taken into account the commercial assessments of the Cove Directors.
* Accordingly, the Cove Directors intend to recommend unanimously that Cove Shareholders accept the Offer as they have irrevocably undertaken to do in respect of their own entire beneficial holdings of Cove Shares and those of their family members and related trusts (representing, in aggregate, approximately 0.95 per cent. of the existing issued share capital of Cove). The Cove Directors have also irrevocably undertaken to accept the Offer in respect of any Cove Shares that they acquire on the exercise of options over, in aggregate, 17,617,647 Cove Shares or any proposals made by Shell Bidco in relation thereto which, together with their existing holdings referred to above, represent approximately 4.38 per cent. of the fully diluted share capital of Cove. Further details of these irrevocable undertakings are contained in paragraph 8 and Appendix 3 of this announcement.
* The Panel has consented to Cove entering into a break fee arrangement with Shell Bidco as a participant in Cove’s announced formal sale process under Note 2 of Rule 1.2 of the Takeover Code. As such, Cove has agreed to pay Shell Bidco a break fee of £11,140,147 (subject to adjustment for VAT) if an Independent Competing Offer is announced (whether under Rule 2.4 or Rule 2.7 of the Takeover Code or otherwise) prior to the Offer lapsing or being withdrawn and such Independent Competing Offer or other Independent Competing Offer becomes or is declared unconditional in all respects.
* The Offer is conditional upon, amongst other things:
- the receipt of written consent of the Republic of Mozambique’s Minister of Mineral Resources (or through one or more delegated representatives) required as a result of the indirect change of control of Cove Mozambique and the Rovuma Area 1 Interest, such consent to be in a form satisfactory to Shell Bidco and such consent, once given, not having been revoked or withdrawn or otherwise having lapsed; and
- Cove Mozambique being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest and, following the release of this announcement, no circumstances having arisen which might reasonably be expected to result in Cove Mozambique no longer being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest.
Commenting on the Offer, Michael Blaha, Executive Chairman of Cove, said: ”The Board believes that the recommended cash offer from Shell Bidco provides very significant value to Cove Shareholders. The proposed transaction is in line with the company’s long term strategy, as set out in May 2009, of delivering value to shareholders through exploration and appraisal. The Cove Directors are delighted that, in addition to this being a very attractive cash offer for shareholders, Shell represents an excellent partner for all the stakeholders in the Rovuma LNG project given its extensive project development, operating and marketing experience in the entire LNG value chain. I am confident, following our discussions with the Government of Mozambique, that timely consent for Shell’s offer will be forthcoming.
I would like to thank all the Cove Directors and the Cove team for their tremendous commitment and contribution to the success of the company and its projects, which I am sure will continue to flourish under Shell’s ownership.”