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    Medco Buys Ophir for $512mn

Summary

The higher bid was enough to secure Ophir board approval.

by: William Powell

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Medco Buys Ophir for $512mn

Indonesian Medco is to buy 100% of UK independent Ophir through its subsidiary Medco Global at the improved price of £0.55 ($0.72)/share, the three companies said January 30. The deal values Ophir at £390.6mn ($512mn) and is at a premium of some 65.7% to the share's £0.332 closing price December 28, the day before the offer was announced.

The bid was substantially raised January 28 when Ophir rejected £0.485/share.

The deal will be funded from Medco's cash resources, topped up by a loan from Standard Chartered advanced under a prior agreement.

The deal now needs three quarters of the shareholders to approve it, and court sanction as well as clearance from the relevant authorities in Tanzania and the retention of Ophir's assets in Thailand. 

Ophir board said the terms were fair and reasonable, and in the best interests of shareholders and so recommend that they vote in favour of the plan at the court meeting and the resolutions to be proposed at the general meeting. It is expected that the takeover will take effect in the first half of the year, if all goes to plan.

Medco CEO Roberto Lorato said the scale, diversification and growth opportunities of the deal, and its "attractive upfront premium for Ophir" would strengthen "Medco's position as a leading independent oil and gas player in southeast Asia. In Medco's view, the combined business will hold a more balanced regional portfolio of producing and development assets, better able to withstand macroeconomic volatility, and will have meaningful production and cash flows to improve Medco's credit position and the ongoing development of the portfolio."

Ophir chairman Bill Schrader said the deal delivers upfront value in cash to Ophir shareholders for the strategy that the directors set out in September 2018, and the Ophir board intends to recommend unanimously the transaction. Ophir was set up in 2004 and since then had become an independent upstream oil and gas exploration and production company with a diversified portfolio of high quality producing and exploration and appraisal assets, he said.

Ophir was advised by Morgan Stanley and Lambert Energy Advisory. The latter also advised Norway's DNO on its hostile takeover of Faroe Petroleum which was finally agreed early this year.