Deltic Energy (AIM:DELT) , formerly Cluff Natural Resources, has ‘unequivocally rejected’ a £12.34 million takeover bid by Reabold Resources (AIM:RBD.L).
Reabold Resources issued a statement late on Wednesday, without the consent of Deltic, proposing a possible all-share offer for Deltic Energy, which would see 1.5 Reabold shares be exchanged for each Deltic share.
Reabold said it believes the offer, which would see the enlarged company become 76.2% owned by Reabold shareholders and 23.8% by Deltic’s, if successfully completed, would deliver ‘clear synergistic benefits and cost savings’ to accelerate a new group strategy.
Reabold, the upstream oil and gas company, said it was “disappointed to receive a letter from the Deltic Board on Wednesday afternoon unequivocally rejecting the Possible Offer.”
It said it would only be minded to proceed with the offer on the precondition that a recommendation from the Board of Directors of Deltic is “ultimately forthcoming.”
In response, Deltic said this morning that the Proposed Offer does not place an appropriate value on the company, specifically placing no value at all on its significant non-cash assets.
Shares in Deltic Energy have traded strongly over the past month increasing from 0.7p to closed at 0.85p on Wednesday afternoon.
Deltic’s Board said it does not believe there to be a strong rationale, commercial logic or sufficient operational synergies that would justify a combination of the two businesses.
The company also highlighted that the proposed offer would be a risky investment for its shareholders who would be exposed to some of Reabold’s portfolio of projects, if the two business were to become one as a result of the takeover.
In particular, the Board of Deltic Energy has estimated limited potential upside associated with several of Reabold’s projects and has a detailed understanding of Reabold's investment in its West Newton project with concerns in relation to its technical viability and materiality.
The announcement details that Deltic will have until 5pm on August 12 to either make a firm offer or announce that it does not intend to do so under UK takeover and merger rules.
Deltic added that “there can be no certainty that Reabold's proposal will result in an offer being made for the Company, nor as to the terms on which any such offer may be made.”
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