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Deltic Energy has received another proposal regarding a possible all-share offer, a month after fending off an approach by Reabold Resources plc, which the board of Deltic felt undervalued the company (see Deltic unequivocally rejects Reabold).
The latest approach comes from AIM-listed Independent Oil & Gas plc (IOG), who announced on 11 September that it is considering a possible all-share offer for the entire issued and to be issued share capital of Deltic, in light of ‘recent movement in the share price of Deltic’. Since Reabold rescinded its bid, Deltic saw its share price increase 31.4% (as of 10 September 2020, being the last day before the announcement). This spike followed the announcement of Deltic’s interim results, which revealed a 44% increase in gas estimates, and 31% increase in estimated success rate for its Selene prospect – which energy giant Shell farmed into. CEO Graham Swindell attributed the companies robust results to the successful ventures it had entered into with Shell in 2019, stating ‘these actions have insulated the Company from the worst of the current volatility within the capital markets brought about by COVID-19 ‘. News of the offer saw Deltic’s share price jump a further 37% in one day, closing at 1.575 pence per share on 11 September.
Similarly to Deltic, IOG also found itself at the end of an unsolicited bid in March last year from RockRose Energy, which the board of IOG described to be opportunistic and undervaluing the company. Since then RockRose was acquired by Viaro Energy limited, with the deal completing early September 2020.
Preliminary research by Market Tracker reveals that oil & gas companies are the second most common takeover target in 2020 (with healthcare, financial services and computing and IT in joint first), making up 10.53% of all takeover announcements, a slight increase from last year during the same period (7.69%). With the oil & gas industry being one of the hardest hit during the pandemic, the increase in sector activity may indicate the industry’s attempts to consolidate in order to survive. Our upcoming Q3 public M&A trend report will explore this and other trends further.
Deltic is yet to release a response regarding the latest approach. IOG has until 9 October 2020 to confirm whether it will make a firm offer for Deltic.
Market Tracker will continue to monitor this transaction as it develops.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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