Drillsearch blocked in takeover

Red light: No go for Drillsearch

Australia-listed Drillsearch Energy’s effort to take over Ambassador Oil & Gas has been stymied by the Australian Takeovers Panel.

The Panel made a ruling on Friday that Drillsearch must not approve any acceptances of its bid offer or appoint any directors to the board.

Rival takeover bidder, Magnum Hunter Resources, made an application to the Panel on Wednesday to block Drillsearch’s takeover.

Drillsearch Energy 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.

US company Magnum Hunter Resources 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.

Ambassador told shareholders it had not changed its recommendation to accept the revised Drillsearch offer but said to hold off until it finished assessing the new Magnum deal.

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