In a joint statement this morning, Nexus and Anzon announced they had agreed to a merger, which values Anzon at about $648 million or $1.75 per share, and comprises $0.71 in cash and $A1.04 in scrip for each Anzon share.
Arc conceded defeat not long after the announcement was made, reporting that it does not intend to raise its offer, which valued the company at a significantly lower $1.175 per share.
“Arc believes that its existing offers to merge with both Anzon and AEL represent fair value and makes strong strategic sense for all shareholders,” it said.
“Arc does not intend to increase its offer as it does not consider the value it has ascribed to Anzon after its detailed and extensive due diligence justifies any such increase.”
The Nexus-Anzon merger announcement comes just four working days before Anzon shareholders were due to vote on Arc’s proposal.
Nexus and Anzon said the new company would have a $1.5 billion market capitalisation and hold 169 million barrels of oil equivalent at the 2P (proved plus probable) level of confidence.
This would make it the fifth biggest oil and gas company on the Australian Securities Exchange holding the third-largest 2P reserves.
Nexus chairman Michael Fowler said the merger would combine Anzon’s immediate production from the Basker-Manta assets with his company’s emerging production profile and substantial reserves base in the Longtom and Crux fields.
“This merger will combine two companies with truly complementary asset positions focusing on the mature Gippsland basin and the rapidly emerging Browse basin,” he said.
“The combination of Anzon’s immediate production and Nexus’ pipeline of production and development assets will create a unique earnings profile that is characterised by substantial and long-term growth.”
Nexus has spent the past couple of months building up a 19.2% stake in Anzon and last week completed a $110 million bonds and warrants issue announced in December.
Also this week, shareholders of Anzon’s parent company Anzon Energy Ltd (AEL) agreed to use the company’s 53.1% stake in the company to vote in favour of Arc Energy’s proposal on January 29, but only in the absence of a superior proposal.
In the short term, the merged entity’s net oil production is forecast to rise from 4600 barrels of oil per day from the Basker Manta oil project this year to 16,900 barrels of oil equivalent per day once the Longtom gas project enters production in 2009.
Production is expected to rise further to 57,000boepd in 2011 once the Crux liquids project and the Basker Manta Gummy gas project come online.
