Oz Warrego Rejects Strike's Takeover Offer

Sydney-listed Warrego Energy has rejected fellow Australian Strike Energy's takeover offer, it said March 23 in a statement.

“The proposal was subject to a number of conditions, including completion of due diligence to Strike's satisfaction; no material asset sales, divestments or similar transactions; no issuance of new equity or changes to Warrego's capital structure; and receipt of a unanimous recommendation by the Warrego board,” it said. “The Warrego board has now reviewed the proposal and has concluded that it fundamentally undervalues the company and its assets.”

Strike offered to purchase all of Warrego shares for an all-scrip consideration of 1.2 Strike shares for each Warrego share. Strike and Warrego are partners in the EP469 joint venture which includes the West Erregulla tenements in the Perth basin, Western Australia.

According to Warrego, the offer, if accepted, would result in Warrego shareholders owning approximately 31% of the merged entity, whereas Strike and Warrego each hold a 50% interest in the EP469 joint venture. “The proposal also undervalues Warrego's other valuable assets, including its Tesorillo project in Spain,” the company said.

The company said it is prepared to engage on any other proposals which are received in the future, whether from Strike or any third party, provided those proposals represent compelling value for Warrego shareholders.

Strike in a separate statement said it “considers the proposal to be highly compelling for Warrego shareholders, who would receive a substantial premium for their shares while retaining a significant ownership in, and participation in the future performance of, a combined company with a stronger balance sheet than Warrego on a standalone basis.”