According to reports in foreign media, the activist investment house Palliser Capital (7%) is working to change the composition of the board of directors and to appoint an Egyptian CEO. Approval of the merger requires a majority of more than 50% of the shareholders
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A large part of the shareholders of the British gas and oil company Capricorn (Capricorn), which plans to merge with the Israeli New Med Energy (formerly Delek Drilling) controlled by Yitzhak Tshuva, announced their intention to oppose the merger deal planned for the first quarter of 2023.
At the head of the opponents is the activist investment house Palliser Capital, which owns 7% of Capricorn, which gradually began to add more investors to its position. Today, according to Palliser in several reports in foreign media, 39% of the investors in Capricorn oppose the deal – which, according to him, include the four largest shareholders (28% together) in Capricorn.
In order for the merger to be approved at the meeting, the consent of more than 50% of the shareholders in Capricorn, which owns oil and natural gas assets in several countries in the world, especially in Egypt, is required, which has already expressed opposition to the merger deal of Capricorn with the British company Tulow. In fact, the deal with New-Med came to replace the deal that fell through.
The investors who oppose the deal demand a general meeting and replace 7 senior officials, including board members and CEO Simon Thomson. Beyond the open letter describing the opposition to the deal, and similar letters from other investment houses that sign their concern about the company’s current management, Palliser went a few steps further. Home The investments set up a website called ReformCapricorn.com that expresses the concern of Capricorn’s management.Also, last week they issued a presentation at Palliser that includes their candidates for the Capricorn board of directors, including the Egyptian Hesham Mekawi who served as the director of the North Africa region at BP.
About two months ago, the companies New Med Energy and Capricorn reported a planned merger, after which the shareholders in Capricorn will receive about 10% of the merged company’s shares, while New Med Energy will start trading on the London Stock Exchange. In addition, the shareholders in Capricorn will receive from the deal a dividend of 620 million pounds based on a share value of 271 cents.
At the time of the announcement of the merger, Capricorn was traded on the London Stock Exchange at a value of 815 million pounds, similar to its value today. New Med Energy, controlled by the Delek Group, is currently trading at a value of NIS 9.2 billion compared to a value of NIS 10.5 billion at the end of last September when the merger was announced.
According to Palliser, the deal does not reflect the true value of Capricorn, as demand for natural gas reserves outside of Russia soared after the start of the war in Ukraine. Palliser also claims that the board of directors did not present alternatives to investors in the event that the deal with New-Med fails. According to them, moves can be made in Capricorn that will lead to a share value of 400 cents-pounds. Also, according to them, the dividend to be distributed in the deal should be 700 million pounds.
According to a Reuters report, due to the opposition of the investors, Capricorn will be required to hold a general meeting with the investors’ demands for the replacement of the management until January 30, 2023. It is still unclear whether and how the opposition will be able to delay the sale planned for the first quarter of 2023.
Capricorn did not respond to inquiries from foreign media regarding the deal if indeed the move to replace the executives would succeed, but claimed that the deal is in the best interest of the shareholders. New Med Energy stated: “There has been no change in the terms of the deal that were agreed upon in the letter of intent signed three months ago, and there is no intention to make any changes in the future. For obvious reasons, we do not refer to internal processes at Capricorn.”