A late intraday RNS from both DEO and Parkmead certainly surprised many. The tie up/merger/offer looks a smart move for both companies as each one is stronger when combined as a greater company.
It gives DEO shareholders immediate exposure to the current Parkmead platypus drill which is expected to TD in the next couple of weeks (excluding any of the normal operational delays).
Mr Cross has moved Parkmead forwards with great speed and the company has all the early signs of another Dana in the making. Surely he cannot do it twice (take a minnow to major success) – can he? I can’t see any reason why not.
If the Platypus drill results are good, then DEO shareholders could be celebrating again in the near future.
May 28th 2012, 4.17pm
DEO Petroleum plc (“DEO”)
The Parkmead Group plc (“Parkmead”)
(to be implemented by way of a Scheme of Arrangement
under Part 26 of the Companies Act)
– The boards of Parkmead and DEO are pleased to announce that they have reached agreement on the terms of a recommended offer under which Parkmead will acquire the entire issued and to be issued ordinary share capital of DEO (the “Acquisition”). It is intended that the Acquisition be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.
– Under the terms of the Acquisition, Scheme Shareholders will be entitled to receive 2 Parkmead Consideration Shares for each DEO Share held at the Scheme Record Time.
– Based on the price of a Parkmead Share of 14.75 pence, being the Closing Price of a Parkmead Share on 25 May 2012, the Acquisition values the entire issued and to be issued share capital of DEO at approximately GBP12.7 million, and each DEO Share at 29.5 pence. This is based on 43,109,931 DEO Shares in issue as at the date of this announcement.
– The consideration of 29.50 pence for each DEO Share represents a premium of approximately:
- 40.5 per cent. over the Closing Price of 21.00 pence per DEO Share on 25 May 2012, being the last practicable date prior to this announcement; and
- 30.5 per cent. to the average Closing Price of 22.61 pence per DEO Share for the one month period up to and including 25 May 2012, being the last practicable date prior to the date of this announcement.
– Parkmead is an AIM listed emerging independent oil and gas company with a stated strategy of utilising the significant technical and commercial expertise that exists within its experienced team, led by its Executive Chairman Tom Cross, to fully exploit the exploration and production opportunities that exist in the Parkmead team’s known and preferred areas of expertise within Europe and Africa.
– DEO is an AIM listed independent oil and gas appraisal and development company focused on the UK Continental Shelf region of the North Sea with a stated intention of acquiring and building a portfolio of profitable assets with near term exploration potential. DEO’s principal asset is its interest in the Perth field in the UKCS. Led by its Chief Executive, David Marshall, DEO’s management team is one of the more experienced development groups currently operating in the North Sea, having had exposure to over 20 developments. DEO owns 52 per cent. and is operator of the Perth field and, having submitted a Field Development Plan to DECC, is targeting recovery of 21.5mmbbls (net to DEO) of resources in the first phase of a planned FPSO development. The DEO Directors’ latest estimate of 21.5mmbbls recoverable is an upgrade to a previous estimate of 14.1mmbbls, as stated in December 2011. DECC consent is anticipated by DEO in due course.
– The DEO Directors, who have been so advised by FirstEnergy Capital LLP, consider the terms of the Acquisition to be fair, reasonable and in the best interests of DEO and DEO Shareholders as a whole. In providing its advice, FirstEnergy Capital LLP has taken into account the commercial assessments of the DEO Directors.
– Accordingly, the DEO Directors unanimously recommend DEO Shareholders to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting (or in the event that the Acquisition is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as the DEO Directors have irrevocably undertaken to do in respect of their entire beneficial holdings in DEO, amounting to, in aggregate, 3,387,342 DEO Shares, representing approximately 7.9 per cent. of the issued ordinary share capital of DEO.
– Parkmead has also received irrevocable undertakings to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting from certain non-director employees of DEO and from institutional shareholders in respect of 17,367,902 DEO Shares, representing 40.3 per cent. of the issued ordinary share capital of DEO.
– In addition, one of the institutional shareholders who has provided an irrevocable undertaking has also provided to Parkmead a non-binding letter of intent that they intend to close a contract for difference in respect of an additional 3,502,700 DEO Shares (representing 8.1 per cent. of the issued ordinary share capital of DEO) and to procure the transfer of the beneficial interest in such shares to it at which point it intends to provide a further irrevocable undertaking on the same terms as the existing irrevocable undertaking it has already given.
– Parkmead has therefore received total irrevocable undertakings and a letter of intent in respect of 24,257,944 DEO Shares representing, in aggregate, 56.3 per cent. of the existing issued ordinary share capital of DEO. All of the irrevocable undertakings remain binding in all circumstances, including in the event of a higher offer, unless the Scheme lapses or is withdrawn.
– The Acquisition is conditional on, inter alia, certain approvals by DEO Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting together with the Forms of Proxy, will be posted by 25 June 2012 and that the Acquisition and the resolutions required to implement the Scheme will be put to DEO Shareholders at the Court Meeting and the General Meeting. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective by 8 August 2012.
Commenting on the Acquisition, David Marshall, CEO of DEO, said:
“The DEO management team has delivered its key objective to take its principal asset, Perth, to FDP submission and has also increased its recoverable resource estimate from 8.6mmbbls at the time of DEO’s admission to trading on AIM in November 2010 to 21.5mmbbls. I believe that the combination with Parkmead will improve the deliverability of the Perth project and allow both management teams to use their complementary skills to address new and exciting project opportunities. I believe that DEO shareholders can look forward to value growth from the creation of one of the most experienced and innovative companies operating in the natural resources sector.”
Commenting on the Acquisition, Tom Cross, Executive Chairman of Parkmead, said:
“This deal will add significant value for both Parkmead and DEO shareholders. The enlarged group will be stronger and better positioned, with a wider base of oil and gas assets in the UK and Netherlands, spanning the whole upstream opportunity-cycle from exploration, through appraisal, development and production.”