The board of Seplat Petroleum Development Company Plc, on Tuesday, announced plans to acquire the entire shares of Eland Oil & Gas Plc, a London based Nigeria focused upstream oil and natural gas exploration and production company.
Eland, listed on the AIM in London with operational offices in Abuja, Nigeria and Aberdeen, Scotland, whose core assets are Oil Mining License (OML) 40 and the Ubima field now under appraisal, is being acquired via a Scheme of Arrangement by Seplat, under Part 26 of the Companies Act 2006.
Under the terms of the acquisition, each unit of Eland is to be acquired at 166 pence in cash, bringing total consideration to about £382m on a fully diluted basis, representing about 28.5% premium to the 129.2 pence closing price per share of Eland on Monday, October 14, 2019. The price also represents a premium of approximately 32.6% to the three-month volume-weighted average price per unit of Eland of 125.2 pence as of the same date; just as it is a premium of approximately 32.7% to the six-month volume-weighted average price per Eland Share of 125.1 pence.
In addition, Eland shareholders on the register at the close of business on October 18, 2019, are entitled to an interim dividend of 1 pence per share, payable on October 31, 2019.
Already, directors of Eland, according to the notice by Seplat to the Nigerian Stock Exchange, agree that the terms of the acquisition are fair and reasonable, considering the commercial assessments of the Eland Directors.
As a result, directors of Eland unanimously intend to recommend that shareholders vote in favour of the Scheme at the Court Meeting.
This is even as “Seplat has received irrevocable undertakings to vote, or procure the voting, to approve the Scheme at the Court Meeting and vote, or procure the voting, in favour of the Resolution at the General Meeting with respect to a total of 129,727,705 Eland Shares, representing approximately 60.17 per cent of the existing issued ordinary share capital of Eland,” the statement added.
The cash consideration payable under the acquisition is being wholly funded through a combination of existing cash resources of Seplat and a new loan facility available to Seplat.
According to the transaction timetable and conditions, the deal will be tabled before shareholders of Eland at the court-ordered meeting and at the general meeting and must be approved by a majority in number of the shareholders voting at the Court meeting, either in person or by proxy, representing at least 75% in value of the Eland Shares voted.
Subject to, among other things, the satisfaction or the waiver of the Conditions, the scheme is expected to become Effective in late 2019.
Commenting on the Acquisition, George Maxwell, Chief Executive of Eland, said the “recommended offer from Seplat represents the culmination of a very successful journey by Eland, the management team and all of its stakeholders.
“Since founding Eland, we have, jointly with our partners in Elcrest, acquired our interests in OML 40, a non-producing asset, achieved an all-time record production on this asset and become a significant independent producer in Nigeria’s E&P landscape and one of the biggest oil producers on London’s AIM market. Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers and the AIM Oil & Gas Index. This transaction represents a record share price for Eland and crystallises Eland’s stated goal to maximise shareholder value.”
Russell Harvey, Chairman of Eland, appreciated Eland’s management team for doing “an excellent job executing our strategy. We have demonstrated a strong track record of operational delivery and value creation in Nigeria from our high-quality assets. This offer allows Eland Shareholders to benefit from an accelerated and enhanced realisation of this value through a cash offer at a significant premium to the current market value. In addition, the business will benefit from the opportunity to become part of a more significant player in the Nigerian oil and gas market. For these reasons, the Eland Board unanimously intends to recommend the offer to Eland Shareholders.”
For Dr. Bryant Orjiako, Chairman of Seplat, “since Seplat acquired its first blocks and commenced production in 2010, we have increased oil and gas production and grown reserves in each year of operation, delivering significant growth and value for our shareholders. We firmly believe that Eland is a complementary fit with Seplat and that there will be an enhanced scale and a wider range of capabilities made available to the enlarged group through the combination. This acquisition signals the next step in our journey that will underpin Seplat’s ambition to be the leading independent E&P in Nigeria.”
Austin Avuru, CEO of Seplat, believes the agreement reached to acquire Eland and its portfolio of assets “will enhance our existing operations. Eland is an excellent fit with Seplat and the combination should achieve for us growth and increased profitability, creating value for our shareholders, employees and other stakeholders while offering an attractive upfront premium to Eland Shareholders. The Acquisition, made possible by our robust operational platform and headroom in our capital structure, is in line with a key part of our established strategy which is to pursue opportunities in the onshore and offshore areas of Nigeria that offer near term production with cash flow and reserves potential.
“The Acquisition reinforces Seplat’s status as one of Nigeria’s leading indigenous, independent E&Ps and will create a Nigerian E&P champion with the footprint and technical capabilities to further grow and consolidate in Nigeria,” he continued.
Professional parties to the offer included White & Case LLP and Olaniwun Ajayi LP, legal advisers to Seplat; and Mayer Brown International LLP, Stronachs LLP, and Streamsowers & Köhn, for Eland.