AOG Recommends to Shareholders to Accept Parker Offer
Australian Oil and Gas Corp Ltd recommended on Friday that its shareholders accept a cash offer by Parker Drilling Co in the absence of a higher bid. Parker Drilling is offering A$2.50 cash for each AOG share and A$1.30 cash for each unexercised AOG listed option, valuing the company at A$162 million ($92 million).
The Parker bid followed a sweetened offer from Ensign Resource Service Group Inc on Wednesday, which topped a bid made by rival Precision Drilling Corp. early last week. The latest offer from Ensign would give AOG shareholders up to A$2.40 a share and A$1.20 for each AOG option. Shares in AOG, which operates 23 drilling rigs and five service units, were five cents up at A$2.62 in early afternoon trade.
"The Board of AOG intends in the absence of a higher offer to recommend the Parker Drilling bid to its shareholders and listed option holders," AOG said in a statement. "Shareholders have already received a supplemental Bidder's Statement from Ensign. In view of the higher offer mentioned above the Board recommends that shareholders reject Ensign's current offer."
An Ensign executive said on Thursday his firm was surprised at Parker's entrance into the bidding war, and would go back to the drawing board to decide its next move. Precision was not prepared to say whether it might top Parker's bid, chief financial officer Dale Tremblay said.
"The combination of Parker and AOG would yield a larger and stronger competitor in the drilling business, with 69 international land rigs, and a total worldwide fleet of 107 rigs," Parker chief executive Robert Parker said in a statement. "The combined company would have a commanding presence in the Asia Pacific markets of Australia, Indonesia, New Zealand and Papua New Guinea."