Drillsearch ups takeover value

Value increase: Extra value added to takeover offer

Australia’s Drillsearch Energy has lifted the value of its offer to take over Ambassador Oil & Gas, adding an extra A$0.05 cash per share.

Drillsearch chairman Jim McKerlie said this new deal would out-value the takeover offer from Magnum Hunter Resources.

The takeover deal is now worth 1 Drillsearch share for every 5.4 Ambassador shares plus A$0.05 cents extra per share.

“The competing Magnum Hunter offer would result in Ambassador shareholders owning New York Stock Exchange listed shares and as such would be subject to a different regulatory regime, have exposure to foreign exchange risk and cross border tax complexities,” McKerlie said.

“Furthermore Drillsearch, through its sole focus on the Cooper basin, provides Ambassador’s shareholders with a broader exposure to this major Australian region whereas Magnum Hunter is focused primarily on US shale gas.”

Ambassador’s board has recommended that shareholders accept Drillsearch’s revised deal.

Drillsearch recently took a 19% stake in Ambassador through an acquisition of more than 28 million shares.

Magnum revealed its intention earlier this month to make its own takeover offer for the Australian company which would see it offer one Magnum share in exchange for every 27.8 Ambassador shares.

The deal carried an implied value of A$0.34 per share, trumping Drillsearch’s previous offer by 20% and representing a 74% premium to the closing price of Ambassador’s shares on 23 May, the last trading day before it revealed Drillsearch’s offer.

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