Beach Energy to merge with Impress
Oil and gas explorers Beach Energy Ltd (ASX: BP) and Impress Energy Ltd (ASX: ITC) have agreed, subject to shareholder approval, to merge through a Scheme of Arrangement.
Beach will acquire all of the issued shares in Impress that it does not own at 8.25 cents per share cash, valuing Impress at approximately $73.1 million. Beach intends to fund the transaction from existing cash reserves. As at 30 September 2010, Beach had $207.5 million in cash reserves.
The offer represents a 35.9 per cent premium to the 1 month Volume Weighted Average Price (VWAP) of Impress shares of 6.1 cents and a 47.3 per cent premium to the 2 month VWAP of 5.6 cents.
The merger allows Impress shareholders to receive a significant premium for their shares, the firms said in a joint statement. Subject to the Scheme being approved, Beach will assume the significant funding obligation required to develop Impress's Cooper Basin assets and the risks associated with the development of the Company's exploration portfolios.
Beach Managing Director Reg Nelson said the acquisition of the Impress assets would provide a natural extension to the company's portfolio of western flank Cooper Basin assets, in line with its strategy of consolidation in the region.
"We are aiming to double our production and reserves over the next two to five years," said Mr Nelson.
"Merging with Impress, which holds permits adjacent to ours in the Cooper Basin, is a logical incremental step in achieving that through both exploration and development targets."
Beach currently operates 19 oil fields in the Cooper-Eromanga with five gas discoveries awaiting development and owns an approximate 21 per cent interest in the Cooper Basin project operated by Santos Limited, while Impress has three producing fields and four oil discoveries jointly operated by Victoria Petroleum.
Impress Chairman Eddie Smith said the transaction represented an outstanding opportunity for shareholders to realise the underlying value of their investment in cash at a substantial premium to the historical trading price of Impress.
"As a Board, we believe this proposal represents very good value for our shareholders, particularly in light of the significant new Cooper Basin funding requirements that lie ahead for Impress as a standalone company," said Mr Smith.
"We recommend that shareholders should vote in favour of the Scheme in the absence of a superior proposal and subject to receiving a favourable Independent Expert's Report.
"The Impress Directors have also stated their intention to vote in favour of the Scheme for all of the shares they control."