Capricorn shareholder Irenic Capital Management raised concerns over the proposed merger, and another shareholder Palliser Capital has replaced almost the entire Capricorn’s board with new directors
UK-based oil and gas company Capricorn Energy has scrapped its planned merger with Israel’s NewMed Energy after leadership changes and shareholder pressure.
In September last year, Capricorn and NewMed announced their potential merger, with plans to complete the transaction in the first quarter of 2023.
Subsequently, Capricorn has unanimously withdrawn its previously announced all-share combination with Tullow Oil (Tullow Combination).
Upon closing, Capricorn shareholders are expected to hold around 10.3% stake in the combined company, while NewMed shareholders own the remaining 89.7% stake.
Through the merger, NewMed aimed to create a top East Mediterranean energy company, while Capricorn planned to establish a top gas and energy company in the MENA region.
The tables turned when Irenic Capital Management, a shareholder of Capricorn Energy, raised concerns over the proposed merger, citing it as unfavourable to shareholders.
Another shareholder, Palliser Capital, urged the Capricorn Energy board of directors to convene a general meeting of shareholders (EGM) to overhaul the board.
Earlier this month, almost the entire Capricorn’s board, including its CEO, were replaced by new directors proposed by Palliser, who announced a strategic review of the company.
Capricorn, in a statement, said: “Based on its work to date in respect of the Strategic Review and taking into consideration the views expressed by shareholders on the NewMed transaction, the board has resolved to advise shareholders to vote against the NewMed transaction.
“This action is necessary to enable the consideration of all potential strategic options for the Company, including the material return of capital to shareholders and potential engagement with respect to alternative options.”
NewMed, in its filing with the Israel Securities Authority, and Tel Aviv Stock Exchange, noted that the company and Capricorn mutually agreed to terminate the transaction.