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Independent review threatens TGS-Wavefield merger



By Upstream staff 

A PROPOSED merger between TGS-Nopec and Wavefield Inseis could fall apart if the findings from an independent review of TGS’ latest quarterly results justify such a move, writes Iain Esau.

The merger of the two players was proceeding smoothly until TGS unveiled a surprise profit warning in its third-quarter results last month, which saw both its own share price plunge and, by association, caused Wavefield’s stock prices to plummet.

The profits warning “cost Wavefield shareholders a lot of money”, said a Norwegian analyst, who did not wish to be named.

As a result, two of Wavefield’s shareholders, Everest Capital and Audley Capital, which hold 8% of the company’s stock, called for an independent review of TGS’ results to see if the company had any idea about the earnings short fall.

PricewaterhouseCoopers (PWC) will undertake this review and will report its findings to both companies before an extraordinary general meeting of Wavefield shareholders on 19 November to discuss the planned merger.

TGS did not co-operate with Wavefield in appointing the third party reviewer or in defining its mandate and workscope, while Wavefield’s board said it had no detailed information on the review’s scope.

The analyst said PWC’s findings could result in a potential instruction to Wavefield’s board to break the merger, although he stressed that the situation is legally complex.

Both companies’ boards have backed the merger but terms and conditions have yet to be agreed.


Friday, 16 November, 2007, 06:47 GMT  | last updated: Friday, 16 November, 2007, 06:47 GMT

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