Tullow Not The Right Suitor, Capricorn Merging With NewMed
Capricorn and NewMed have announced a proposed combination to create a MENA gas and energy firm and one of the largest upstream energy independents listed in London.
Capricorn said that a cash special dividend of $620 million is proposed to be paid to existing Capricorn shareholders immediately before the completion of the combination.
The combination will result in Capricorn shareholders holding approximately 10.3 percent of the share capital of the combined group and NewMed unitholders, together with NewMed’s current general partner, holding in aggregate approximately 89.7 percent of the share capital of the combined group.
The combined group will trade under the name NewMed Energy and expects to retain its existing Premium Listing on the London Stock Exchange. It intends to also implement a listing of its entire issued share capital on the Tel Aviv Stock Exchange.
The board of directors of Capricorn believes that the transaction is in the best interests of Capricorn shareholders and intends to recommend a unanimous vote in favor of the transaction. Accordingly, the Capricorn board has unanimously decided to withdraw its intention to recommend the Tullow combination.
The board of directors of NewMed has also confirmed it would recommend unanimous unitholders vote in favor of the resolutions to approve the combination.
Delek Group, NewMed’s principal unitholder, which holds voting interests in 54 percent of NewMed’s units, has entered an irrevocable commitment to vote its units in favor of the combination. It is currently proposed that Simon Thomson, the CEO of Capricorn, become the transitional chair of the combined group, to provide continuity through the combination process.
As well as the chair, the Board of the combined group will comprise Yossi Abu as CEO, James Smith as CFO, and seven non-executive directors, with two expected to be representatives of the Delek Group and five expected to be independent non-executive directors – two of which will come from the existing Capricorn board.
This transaction creates a company with a diversified portfolio of high-quality producing and exploration assets across Cyprus, Egypt, Israel, the UK, Mexico, Mauritania, and Suriname underpinned by 45.34 percent interest in the Leviathan producing field. The combined group will have combined 2P + 2C reserves and resources of 11.8 tcf and 690 MMscfd of net working interest production and tangible development projects set to deliver production to over 1.2bcf per day by 2030 subject to relevant project approvals.
“The Board has engaged in a robust and dynamic process to evaluate options for Capricorn and considered a broad range of external factors and market conditions. The combination with NewMed and a cash special dividend represents the delivery of significant value for Capricorn shareholders. We believe this is a compelling transaction which combines near-term value realization with ongoing participation and value creation in a world-class gas company,” Nicoletta Giadrossi, Chair of Capricorn, said.
“This transaction delivers our shareholders a substantial capital return, together with an ongoing stake in a differentiated UK listed company, shaped for the future of the energy industry. The combined business will offer investors a gas business of scale, with the prospect of near-term growth, a dependable capital returns policy, and a compelling ESG narrative to support the energy-hungry markets of the Middle East, North Africa, and Europe,” Simon Thomson, Chief Executive of Capricorn, added.
“The combination will play a pivotal role in the energy transition, through organic brownfield cost-effective developments while delivering attractive returns to our shareholders. On behalf of NewMed, I would like to thank all our stakeholders for their support of this highly attractive combination. With our new partners at Capricorn, we are extremely excited about the future,” Yossi Abu, Chief Executive of NewMed, concluded.
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