Warrego shareholders are expected to receive 0.775 new shares of Strike, in exchange for each Warrego share held, in addition to net proceeds from the sale of Warrego’s Spanish assets, within 12 months
Strike to acquire remaining stake in Warrego. (Credit: Galen Crout on Unsplash)
Australia-based oil and gas exploration company Strike Energy is set to take full control of its joint venture partner Warrego Energy.
Warrego confirmed that the two companies are in talks over a potential merger.
Under the terms of the proposed merger, Warrego shareholders are expected to receive 0.775 new shares of Strike, in exchange for each Warrego share held.
The transaction consideration also includes net proceeds from the sale of Warrego’s Spanish assets, to be completed within 12 months of implementation of the scheme.
Upon completion, Strike shareholders are expected to would around 72% of the combined entity, while Warrego shareholders would own the remaining 28%.
Warrego, in its statement, said: “The Warrego Board considers the Proposal is at a sufficient level to merit further review and has determined to grant due diligence access to Strike.
“Warrego is also undertaking due diligence on Strike in order to determine whether to recommend a transaction to its shareholders. In addition, it is negotiating the potential terms of a scheme implementation deed that would govern any transaction.
“Any scheme implementation agreement entered into between the parties would itself be subject to a number of conditions including Warrego shareholder approval.”
Strike initially made a non-binding proposal in September to buy all the remaining shares it does not own in the company, under a scheme of arrangement.
On 16 October, the company improved its offer to exchange 0.7521 new shares in its common stock, for each Warrego share held, from the initial offer of 0.7142 shares.
On 27 October, Warrego announced its intention to unanimously recommend the merger if Strike exchanges 0.7750 of its new shares for each Warrego share held, in addition to proceeds from the sale of Warrego’s Spanish assets.
The two companies have entered a mutual confidentiality agreement, for confirmatory due diligence and negotiation of necessary binding transaction documentation.
Strike, in its statement, said: “The consolidated ownership of these Greater Erregulla permits provides the opportunity to optimise, accelerate and maximise the development strategy of the high-quality conventional gas resources, focussing on the physical integration of Strike’s 100% owned 3,500 hectares of land at the Mid-West Low Carbon Manufacturing Precinct for hosting critical infrastructure.
“The combined entity would also possess a world-class development portfolio in the low-risk jurisdiction of the Perth Basin in WA consisting of gas, hydrogen, renewable energy, carbon capture developments including Strike’s flagship and nationally significant Project Haber low-carbon fertiliser development.”