Seplat, Eland Oil stakeholders resolve acquisition issues

Seplat, Eland Oil stakeholders resolve acquisition issues - Printable Version

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Seplat, Eland Oil stakeholders resolve acquisition issues - Edoman - 11-28-2019

Seplat, Eland Oil stakeholders resolve acquisition issues
November 28, 2019

in Business, Energy

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Bryant Orjiako

[url=https://thenationonlineng.net/wp-content/uploads/2019/11/Chairman-Selplat.jpg]

Stakeholders of Seplat and Eland Oil & Gas have resolved the misunderstanding in the acquisition of the Eland by Nigeria’s independent – Seplat Petroleum Development Company Plc, reports MUYIWA LUCAS

Stakeholders in the Seplat Petroleum Development Company Plc and some aggrieved stakeholders in Eland Oil & Gas Plc, which was recently acquired by Seplat, have amicably resolved the misunderstanding making the transaction acceptable to all stakeholders.

On October 15, 2019, Seplat Petroleum Development Company Plc’s planned acquisition of Eland Oil & Gas, an independent exploration company, hit the news space.

According to the terms of the agreement, Seplat will pay 166 pence a share for Eland in a purchase valuing the London-traded company at about $484 million. Eland’s directors recommended that shareholders vote in favour of the deal, which represents a premium of 33 per cent to the six-month average share price.

It was also stated that any shareholder of Eland Oil & Gas whose name appeared on the register as at close of business on Friday, October 18, would stand a chance of receiving and retaining the interim dividend, which the company had planned to pay on October 31, 2019.

It was understood that Eland’s board of directors signed an undertaking, which makes it almost a done deal. In effect, Seplat Petroleum received an irrevocable undertaking. But Starcrest Nigeria Energy Limited, one of the stakeholders, issued caution on the proposed acquisition of Eland Oil and Gas Plc by Seplat Petroleum Development Company.

According to Starcrest, the caution was issued on many grounds but mainly because of fundamental misrepresentations, or material omissions in representation, which have been made to the market in general and to the respective shareholders. However, it was reliably gathered that Emeka Offor, the Chairman of Starcrest Nigeria Energy Limited, George Maxwell, CEO of Eland and Bryant Orjiako, Chairman of Seplat met in London to settle the impasse resulting in a favourable outcome for all parties while the acquisition process continues.

The meeting may have prompted Eland Oil & Gas shareholders to give overwhelming backing to the takeover of the Aberdeen-based firm. Also, the Boards of Eland and Seplat announced that at the Court Meeting and the General Meeting held on November 20, 2019 by Eland and convened in relation to the proposed scheme, all the proposed resolutions for the take-over were duly passed by the requisite majorities.

Commenting on the deal, the Chief Executive Officer of Eland, George Maxwell, said: “We are glad to have contributed immensely to the growth of the Nigerian oil and gas industry. Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers on the AIM Oil & Gas Index.”

Seplat’s Company Secretary, Edith Onwuchekwa, in a statement issued to the Nigerian Stock Exchange, stated that “the Boards of Seplat and Eland are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Eland by Seplat.”

The upsides

Eland, whose main asset is the oil mining lease (OML) 40 in the Niger Delta, was founded in 2009 and “listed on AIM w, the London Stock Exchange’s growth market. The acquisition will boost Seplat’s production to 64,000 barrels of oil equivalent a day and this will propel Seplat to become Nigeria’s biggest oil exploration and production company.

So far, Seplat has remained profitable this year, with half-year 2019 profit increasing 152.6 per cent to N37.5 billion. The deal represents a big boost to the Nigerian Local Content Act, which stipulates that Nigerian operators and indigenous service companies shall be given first consideration in award of oil blocks, licences and works in the sector.

“Eland has contributed greatly to helping the Federal Government achieve its mission of growing local participation in the sector. This is reflected in our choice of Seplat to acquire Eland,” says Maxwell.