Strike Energy Ltd., Adelaide, has made an off-market takeover offer UIL Energy Ltd. of Brisbane. Under the offer, UIL shareholders will receive 0.485 of a share of Strike for each share of UIL—a deal that implies an indicative price for UIL of 7.03¢/share and an indicative market capitalization of $16.1 million (Aus.). The offer price represents a 43.4% premium for UIL shares based on that company’s 30-day volume weighted average price of 4.6¢ on Oct. 19.
The offer is subject to many conditions, including completion of a capital raising by Strike of at least $13 million (Aus.) and a minimum offer acceptance of 50.1%.
UIL’s board has unanimously recommended shareholders accept the offer in the absence of a superior proposal. If the takeover is successful, Strike and UIL will form a newly merged entity that consolidates the portfolios of both companies.
Strike’s primary focus is the Cooper basin of South Australia where it holds interests in five key permits, three of them majority owned. Strike is in the process of bringing two new wells in its Jaws field pilot program into production.
Strike also has a 50% interest in the West Erregulla exploration permit (EP 469) in the onshore north Perth basin of Western Australia. The Perth basin is also UIL’s focus, which makes the merger an attractive proposition.
Strike Chairman John Poynton said the transaction plays to Strike’s strengths of being a low-cost and high-impact onshore exploration and appraisal operator. The addition of UIL assets also diversifies Strike’s portfolio across multiple plays in the Perth basin and provides the merged group with permits covering about 3,000 sq km in the region.
UIL’s chairman Simon Hickey called the deal a compelling offer with potential to supply gas on both the west and the east coasts of Australia via the Perth and Cooper basins, respectively.
Upon completion of the deal, UIL would own about 9% of the shares of the newly merged Strike-UIL Group, which will operate in the Perth basin.