Seplat Petroleum Development Plc is set to consummate its deal to acquire Eland Oil and Gas Plc following the amicable resolution of issues raised by Starcrest Nigeria Energy Limited, a key stakeholder in Eland.
Starcrest, a member of the Chrome Group of companies, had on November, 13, issued caution on the proposed acquisition of Eland Oil and Gas by Seplat , which was announced on October 15, on the Nigerian Stock Exchange (NSE) .
According to Starcrest, there were fundamental misrepresentations, or material omissions in representation made by Eland and Seplat to NSE and the respective shareholders.
Among the issues raised in the warning notice by Starcrest Counsel, Ogochukwu Ifeoma Aniekwe, was that the acquisition, which was based on Seplat Petroleum owning a 45 per cent stake in an oil mining lease held by Eland Oil and Gas, “is not true as Eland is not the operator of the license as portrayed to the general public.”
However, sources familiar with the deal hinted yesterday that the Chairman of Starcrest, Sir Emeka Offor, met in London recently with the CEO of Eland, George Maxwell and Chairman of Seplat, Bryant Orjiako, where the trio resolved the impasse, resulting in a favorable outcome for all parties.
The meeting, according to the sources might have prompted Eland Oil & Gas shareholders to give overwhelming backing to the takeover of the Aberdeen-based firm.
Also, in continuation of the deal, the Boards of Eland and Seplat stated that at the court approved meeting and the general meeting held last week, which was convened in relation to the proposed scheme, all the proposed resolutions for the take-over were duly passed by the requisite majorities.
Eland, whose main asset is the OML 40 license in the Niger Delta, was founded in 2009 and listed on AIM, the London Stock Exchange’s growth market. Expectedly, the acquisition will boost Seplat’s production to 64,000 barrels of oil equivalent a day and propel it to becoming Nigeria’s biggest oil exploration and production company.
Seplat said its half-year 2019 profit rose 152.6 per cent to N37.5 billion.
The deal, according to industry sources, represents a big boost to the Nigerian Local Content Act which stipulates that Nigerian operators and indigenous service companies shall be given first consideration in award of oil blocks, licences and works in the sector.
“Eland has contributed greatly to helping the federal government achieve its mission of growing local participation in the sector. This is reflected in our choice of Seplat to acquire Eland,” Maxwell said.
According to the terms of the agreement, Seplat will pay 166 pence a share for Eland in a purchase valuing the London-traded company at about $484 million. Eland’s directors will recommend that shareholders vote in favor of the deal, which represents a premium of 33 per cent to the six-month average share price.
It was also stated that any shareholder of Eland Oil & Gas whose name appears on the register as at close of business on Friday, October 18th, will stand a chance of receiving and retaining the interim dividend which the company had planned to pay on October 31st, 2019.
“We are glad to have contributed immensely to the growth of the Nigerian oil and gas industry. Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers on the AIM Oil & Gas Index,” Maxwell added.