Article by Sean Smith courtesy of the West Australian.
Gina Rinehart has taken barely seven hours to return fire at Beach Energy, adding a $61 million sweetener to better its rival suitor’s bid for Warrego Energy.
In a clear statement of intent, Mrs Rinehart’s Hancock Prospecting did not even wait out the day before announcing an increased offer of 28¢ a share for Warrego, escalating a takeover battle for the Perth Basin gas play that has its shareholders celebrating.
The increased cash bid, which revalues Warrego at $342m, betters Beach’s revised offer of 25¢ a share announced earlier on Friday and will again trigger provisions that give the company a week to match the offer or walk way.
However, Hancock’s deep pockets – it had $17.5 billion in cash as at June 30 – and its private ownership make Hancock a formidable adversary.
The takeover tussle is reminiscent of Mrs Rinehart’s successful battle for Atlas Iron four years ago when she took on Andrew Forrest’s Fortescue Metals Group and Chris Ellison’s Mineral Resources before snaring the iron ore junior.
Just days ago, Beach was in the box seat to win control of Warrego after gaining the backing of Warrego’s board last month for a 20¢-a-share offer.
The target company had previously passed over an all-scrip proposal from Strike Energy, its partner in the proposed West Erregulla gas project in the Perth Basin.
The promise of extra cash was enough to drive Warrego’s shares up almost 9 per cent in the first 30 minutes of trading on Friday to 28.2¢ — that’s 39 per cent higher than the 17.5¢ closing price before Strike lobbed its offer on November 10.
Warrego’s shares last closed above 28¢ in early November, 2019.
Crashing the agreed Beach bid on Wednesday, Hancock said that Warrego would be “complementary and a strategic fit”, with its bidder’s statement suggesting it is open to further consolidation in the region if successful.
In a short statement to the Australian Securities Exchange on Friday, Beach said its board considered the counterproposal would “provide a superior outcome to Warrego shareholders than the Hancock off-market takeover offer”.
Warrego said it would consider the new proposal and update shareholders in due course.
Strike, with an 8 per cent equity stake in Warrego, remains interested in a buyout, with a proposed offer of 0.775 of its shares for every one in Warrego indicatively valuing its rival at 23.25¢ a share at the close of trading on Thursday. However, it appears to have little hope of winning the company unless it adds cash to its bid.
Beach is 30 per cent owned by Seven Group Holdings, the major shareholder of Seven West Media, the publisher of thewest.com.au.
