Berkley Opens Data Rooms, Hunt Extends Offer's Time Period
Hunt Oil Co.'s unsolicited bid to purchase all of the issued and outstanding shares of Berkley Petroleum Corp. for C$10 per share was received as expected by Berkley shareholders, with the Dallas-based company extending an olive branch by saying it would lengthen the time period for its offer to be reviewed.
However, in an attempt to lure other buyers, Berkley is opening access to its data rooms beginning this week to anyone willing to sign a confidentiality agreement.
Hunt subsidiary Hunt Oil Canadian Acquisition II Corp. launched the uninvited, $C1.03 billion (US$710 million) offer to buy Calgary-based Berkley, Canada's 27th-largest gas producer, the last week of 2000. After receiving the official offer last week, Berkley said its special committee of independent directors would review the offer, and said it has retained Peters & Co. Ltd. and Scotia Capital Inc. to review and advise it.
Alan Pettie, chair of Berkley's special committee, said the company would pursue all alternatives to the Hunt offer to "maximize value for Berkley's shareholders." Under a retaliatory Shareholder Protection Plan, enacted following the Hunt bid, the board voted to give itself "sufficient time" to consider any takeover bids and enough time to generate competing bids and alternative proposals.
Under the protection plan, the Hunt offer did not qualify as a "permitted bid" because it did not meet certain requirements that protect the interests of shareholders including, among other things, being open for acceptance up to 60 days. Berkley's board said the 60-day period is required to allow it to evaluate the offer and pursue alternatives. In response, Hunt, which already owns about 10% of Berkley, said it would extend its offer - but not by four months.
"We recognize that Berkley has work to do in connection with our offer," said Craig Glick, senior vice president of Hunt Oil. "Therefore, our offer will remain open substantially longer than the customary 21-day period. This additional time ensures Berkley will have sufficient time to explore all alternatives by Feb. 6, and that the Shareholder Rights Plan adopted by Berkley in response to our offer will have served its purpose and outlived its usefulness prior to that time."
Hunt, whose Canadian offices are headquartered in Calgary, is working on its third attempt to secure more Canadian holdings. It lost a bidding war against Anderson Exploration Ltd. for Ulster Petroleums Ltd. in April 2000, but two months later succeeded in scooping up Newport Petroleum Corp. with a friendly offer of C$489 million (US$337 million).
Hunt's targets have all belonged to a large, frustrated segment of the Canadian gas companies that have been better at exploration and production than at persuading investment houses to bid up under-valued share prices. Of the latest attempt by Hunt, analysts predicted it would prove to be only an opening bid. Berkley entered 2000 with gas production approaching 150 MMcf/d and a formidable array of growth prospects including operations in the prolific Fort Liard area of the southern Northwest Territories.
Carolyn Davis, Houston
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