The Court of Appeal of Yukon has overturned the Supreme Court of Yukon’s prior approval of ExxonMobil Corp.’s $2.5-billion takeover of InterOil Corp. following the challenge by dissident InterOil shareholder and former Chief Executive Officer Phil Mulacek.
The deal had received shareholder approval before Mulacek lodged his appeal.
InterOil and ExxonMobil are now considering the ruling and determining a different path to consummation.
ExxonMobil won a bidding war with Sydney and Port Moresby-based Oil Search Ltd. when Oil Search dropped out of the running for InterOil in July.
Both boards of ExxonMobil and InterOil unanimously approved terms of the deal, which offered $45/share for InterOil plus the potential for additional cash payment. The deal was slated to be closed in September subject to shareholder and regulatory review.
However Mulacek, who stepped down as InterOil chief executive officer in 2013 but still owns InterOil shares, called the offer vastly inadequate.
He said in its current form, the ExxonMobil deal would create a multimillion dollar shortfall for InterOil shareholders based on the gas reserves contained within the Elk-Antelope discovery in the eastern Highlands of Papua New Guinea—InterOil’s major asset.
Despite the court’s ruling, InterOil still believes the current agreement represents compelling value for all the company’s shareholders and is looking at ways to close the deal.
InterOil holds interests in six permits in Papua New Guinea including 36.5% interest in retention lease PRL15 that holds the Elk-Antelope discovery now operated by Total SA. The field is slated to supply feedstock for the proposed Papua LNG project.
Oil Search also is a member of the Elk-Antelope joint venture.
