NEXUS Energy Ltd, the Australian oil company developing a natural gas liquids project, has agreed to buy rival Anzon Australia Ltd for about A$648 million (US$564 million) in cash and stock, topping an offer from Arc Energy Ltd.
The offer values Sydney-based Anzon at A$1.75 a share, Melbourne-based Nexus told the Australian Stock Exchange yesterday. That's 29 percent higher than Anzon's closing price on Tuesday and 36 percent above Arc's stock-only bid, which the Perth-based company said wouldn't be raised.
Buying Anzon will give Nexus production from its Basker-Manta oil venture off Australia's southeast, yielding immediate cash flows in advance of the start-up of Nexus's own projects, commencing in 2009. The value of Arc's offer has dropped 29 percent since it was first made in October as Arc's share price fell, said Bloomberg News.
"This offer is more attractive for Anzon, and it is at a premium, so Anzon is getting a better deal this way," said Johan Hedstrom, an oil and gas analyst at Bell Potter Securities Ltd in Sydney. "Nexus is offering fairly full value for Anzon and putting the two together gives a bit of dilution to Nexus's valuation, but there are obvious benefits - immediate cash flow and more portfolio diversification."
The higher price offered by Nexus triggered the decision by Anzon's board to switch its recommendation away from Anzon's offer to the new one, Anzon Chairman Steven Koroknay told reporters yesterday. "The final clincher was the price," he said.
Anzon jumped 18.5 cents, or 14 percent, to A$1.54 on the exchange, 21 cents lower than the valuation of Nexus's bid. The gain outpaced a 6.3-percent increase in the exchange's benchmark energy index, after the United States Federal Reserve unexpectedly cut interest rates in a bid to revive the economy.
Nexus rose nine cents, or 6.8 percent, to A$1.41 on the exchange yesterday.