Drillsearch takes over Ambassador

Cooper-focused Drillsearch Energy has taken over Australia's Ambassador Oil & Gas through an off-market takeover.

The deal was announced on Wednesday shortly before the companies entered into a bid implementation agreement.

Drillsearch’s subsidiary has taken over all ordinary shares in Ambassador that it did not already own.

Ambassador’s directors unanimously voted in favour of the takeover, recommending shareholders accept the offer.

Shareholders will be offered one Drillsearch share for every 5.4 Ambassador shares, which gives the offer an implied value of $0.29 per share based on Drillsearch’s closing price on Tuesday.

It also implies a premium of 50% to the closing price of Ambassador’s shares on Friday, the last trading day before entering a trading halt.

The offer is subject to a number of terms.

The deal gives Ambassador shareholders exposure to the upside potential of the company’s assets to its shareholders.

It also gives shareholders exposure to a prolific oil business on the western flank of the Cooper basin.

Drillsearch said this deal consolidated the companies’ assets across the northern Cooper basin.

"The boards of both Ambassador and Drillsearch believe that there is a compelling strategic rationale for the transaction, which consolidates Drillsearch’s dominant position in the northern Cooper wet gas area by combining Ambassador’s 47.5% non-operated interest in PEL 570 with Drillsearch’s 80% owned and operated interest in the adjacent PEL 101,” the company said.

Drillsearch entered the northern area of the Cooper basin in 2013 through the acquisition of Acer Energy.

Ambassador chairman David Shaw said the offer represented a good opportunity to capture the value of the company, while Drillsearch chairman Jim McKerlie said the deal was a significant opportunity to secure the company’s position in the Cooper.

“This transaction offers Drillsearch a significant opportunity to consolidate the company’s dominant position in the wet gas fairway in the northern part of the Cooper Basin through combining an interest in PEL 570 with adjacent permit PEL 101,” he said.

Ashurst is acting as Drillsearch’s legal advisor on the deal.

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