not me . will be strictly an armchair observer
Good afternoon divs4ever
Feet up on the stool too? ha ha ha ha ha ha .
Kind regards
rcw1
Financial Review article
Beach Energy creates a contest for Perth Basin’s Warrego
Anthony Macdonald, Sarah Thompson and
Kanika Sood
Nov 11, 2022 – 6.57pm
Seven Group-backed Beach Energy has made its first material M&A move in five years, joining the bidding war for Perth Basin play Warrego Energy. Beach Energy, with no bankers in tow, has lobbed a 20¢ a share indicative and non-binding offer, valuing Warrego’s equity at close to $250 million.
Perth Basin partner Warrego Energy Ltd and Strike Energy have held on and off merger talks for years. Now Beach Energy has put up its hand for Warrego.
Warrego’s said the bid’s good enough for due diligence and will open up its books at the same time as it entertains joint venture partner Strike Energy, which made a scrip-based bid.
Both suitors could increase their offers should they acquire Warrego and be able to sell its Spanish assets within 12 months.
It’s interesting to see Beach Energy enter the fray. The company’s been on the M&A sidelines since
acquiring Origin Energy’s Lattice Energy for $1.6 billion in 2017.
The view among analysts is that Beach has been somewhat constrained in chasing deals by its major shareholder Seven Group, which owns a 30 per cent stake and keeps a close eye on the company.
Beach was in a $38 million net cash position at September 30, according to its quarterly report released last month, and had undrawn facilities worth $490 million. Analysts expect it to report $1.77 billion revenue and $1.16 billion EBITDA in the 2023 financial year which, combined with its balance sheet position, means it shouldn’t have too much trouble swallowing Warrego should it get to that point.
Warrego is focused on developing onshore assets in Australia and Spain. The bulk of its value comes from its 50 per cent stake in the West Erregulla gas project, which is not yet in production. Beach Energy has existing interests in the Perth Basin.
Warrego has RBC Capital Markets and Allens in its corner, running what’s quickly turned into an auction. The company disclosed Strike’s interest on Thursday, only for Beach Energy to pop out of the woodwork on Friday night.
Strike’s scrip-based bid valued Warrego at 18.6¢ a share when it was lodged in late October.
Both bidders would like a board recommended deal and a scheme of arrangement.
Strike, the company’s 50 per cent partner in the West Erregulla project and
long-time mooted merger buddy, is sitting on an 8.2 per cent pre-bid stake. Fund managers reckon the pair have a unique relationship, working together well at a project level but not always seeing eye to eye on corporate matters.
Strike has Macquarie Capital and DLA Piper in its corner.