The takeover battle for Ambassador Oil and Gas Ltd. intensified Tuesday as Magnum Hunter Resources Corp. increased its offer for the Australian explorer.
A day after counterpart Drillsearch Energy Ltd. added cash to an earlier share bid for Ambassador, US-based Magnum Hunter showed it was ready for a fight by raising an offer the company made for the Cooper Basin focused junior a week ago.
According to New York-listed Magnum Hunter, its new offer values Ambassador at the equivalent of $0.355 (AUD $0.38) per share, adding the bid was worth 15 percent more than Drillsearch’s revised offer. Magnum Hunter is now offering one of its shares for every 23.6 Ambassador shares.
Drillsearch’s revised bid offers one of its shares for every 5.4 Ambassador shares, plus $0.047 (AUD $0.05) in cash, valuing the Australian explorer at $0.32 (AUD $0.34) per share, or about $45 million (AUD $48 million).
Magnum Hunter said in a statement that its revised offer of ordinary shares represented a more attractive investment than Drillsearch’s latest bid.
However, despite the competition from Magnum Hunter, almost a third of Ambassador’s shareholders have accepted the offer made by Drillsearch, including Chairman David Shaw and Chief Executive Officer Guistino Gugliemo, holders of a 6.34 percent interest.
In response to the acceptance, Magnum Hunter said it “is concerned that such actions have denied Ambassador shareholders the opportunity to participate in the improved Magnum Hunter offer, and have delivered control of Ambassador to Drillsearch to the detriment of Ambassador shareholders.
“Magnum Hunter is concerned that such acceptances have not taken place in an efficient, competitive and informed market and are inconsistent with the actions that would normally be associated with achieving the best possible outcome for Ambassador shareholders,” the company said.
Magnum Hunter intends to make an application to the takeover panel governing proposed deals on the Australian Securities Exchange (ASX) in relation to this situation. Meanwhile, Drillsearch has five days to match the latest offer from Magnum Hunter.
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