I've set up this thread as a "home" for any live topics relating to M&A in the Oil sector.
With virtually every stock in the sector continuing to trade well below estimated NAVs, there will be frequent bid situations emerging. Some of these will be agreed bids but, in the present climate, unsolicited bids are also highly likely.
I'm starting the ball rolling with a link to an Australian bid situation, in which the target company (called Target Energy, funnily enough) is rebutting a hostile bidder in typically strong Aussie terms: http://newsstore.theage.com.au/apps/previewDocument.ac?docID=GCA00953206TEX&f=pdf
The link may take some time to download - it is to a 162 page document giving chapter and verse on why Target recommend rejection of a bid that they (and their professional advisers) consider values Target at around HALF its true value. The relevance of the link is that the Grant Thornton section of the document demonstrates a range of different ways of trying to value an E&P company and is therefore of some generic interest to people who own shares in future bid targets.
Target's shares recently hit a low of 2.5 cents before the bid was tabled in mid-April. They are now 5 cents. Grant Thornton (acting for Target) reckon the bid is worth around 6.35c, whereas they think Target is actually worth around 11.9c per share......in other words they reckon that Target was, at its recent lows, trading at only 21% of its true value. So........it will be interesting to see how the defence gets on. [Edit 20/7/09: Successful defence - see http://www.stockopedia.com/forum/view/28067/ma?comment=121#121 ]
What is also interesting from the perspective of a UK holder is that the non-exec Chairman of Target, Didier Mercia, is also a director of Aminex. Holder of Aminex will know that they are another company that has US assets (like Target) that are being substantially undervalued by the market at present.....so it is nice to see Aminex getting a bit of first-hand experience before the predators arrive, in turn, at their door! ;-0
Feel free to add any other bid situations of interest to this thread. [Edit: Do not, however, use it to speculate endlessly about the bid prospects for specific companies, especially where there is little likelihood of M&A news in the near future. Contributions which digress from matters of general sector interest are liable to be removed].
Filed Under: Energy,