Directors accept Drillsearch offer

Drillsearch deal: Ambassador directors take the offer

Directors of Australia’s Ambassador Oil & Gas have accepted the unconditional takeover offer by Drillsearch Energy.

This is the latest development in the ongoing tussle between Drillsearch and US player Magnum Hunter Resources.

Directors of the company control about 8.8% of the issued share capital of Ambassador, which was sold for $0.33 per Ambassador share.

This is a 71.89% premium on the closing price of Ambassador shares at close on 23 May, the last day of trading before the company entered into a trading halt.

The Drillsearch provided cash and shares in the Australian Securities Exchange, while also giving shareholders more liquidity in the short term and more control.

Shareholders were encouraged to take the Magnum offer if they preferred to have exposure to the New York Stock Exchange and want a higher implied premium for shares.

Drillsearch initially made a takeover bid for the company earlier this year, making a bid whereby shareholders would be offered one Drillsearch share for every 5.4 Ambassador shares, which gave the offer an implied value of A$0.29 ($0.27) per share.

Magnum then made a takeover bid, with the deal carrying an implied value of A$0.34 per share, trumping Drillsearch’s offer by 20%.

After taking a 19% stake in Ambassador, Drillsearch upped the stakes adding an extra cash offering was made on top of the existing deal.

Magnum came back to the table with an even sweeter deal.

Not only did it offer better value, it also offered Ambassador shareholders the option to take cash instead of Magnum stock by participating in a sale facility.

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