NGI The Weekly Gas Market Report
Hunt Oil Co.’s unsolicited bid to purchase all of the issued andoutstanding shares of Berkley Petroleum Corp. for C$10 per sharewas received as expected by Berkley shareholders, with theDallas-based company extending an olive branch by saying it wouldlengthen the time period for its offer to be reviewed.
However, in an attempt to lure other buyers, Berkley is openingaccess to its data rooms beginning this week to anyone willing tosign a confidentiality agreement.
Hunt subsidiary Hunt Oil Canadian Acquisition II Corp. launchedthe uninvited, $C1.03 billion (US$710 million) offer to buyCalgary-based Berkley, Canada’s 27th-largest gas producer, the lastweek of 2000. After receiving the official offer last week, Berkleysaid its special committee of independent directors would reviewthe offer, and said it has retained Peters & Co. Ltd. andScotia Capital Inc. to review and advise it.
Alan Pettie, chair of Berkley’s special committee, said thecompany would pursue all alternatives to the Hunt offer to”maximize value for Berkley’s shareholders.” Under a retaliatoryShareholder Protection Plan, enacted following the Hunt bid, theboard voted to give itself “sufficient time” to consider anytakeover bids and enough time to generate competing bids andalternative proposals.
Under the protection plan, the Hunt offer did not qualify as a”permitted bid” because it did not meet certain requirements thatprotect the interests of shareholders including, among otherthings, being open for acceptance up to 60 days. Berkley’s boardsaid the 60-day period is required to allow it to evaluate theoffer and pursue alternatives. In response, Hunt, which alreadyowns about 10% of Berkley, said it would extend its offer – but notby four months.
“We recognize that Berkley has work to do in connection with ouroffer,” said Craig Glick, senior vice president of Hunt Oil.”Therefore, our offer will remain open substantially longer thanthe customary 21-day period. This additional time ensures Berkleywill have sufficient time to explore all alternatives by Feb. 6,and that the Shareholder Rights Plan adopted by Berkley in responseto our offer will have served its purpose and outlived itsusefulness prior to that time.”
Hunt, whose Canadian offices are headquartered in Calgary, isworking on its third attempt to secure more Canadian holdings. Itlost a bidding war against Anderson Exploration Ltd. for UlsterPetroleums Ltd. in April 2000, but two months later succeeded inscooping up Newport Petroleum Corp. with a friendly offer of C$489million (US$337 million).
Hunt’s targets have all belonged to a large, frustrated segmentof the Canadian gas companies that have been better at explorationand production than at persuading investment houses to bid upunder-valued share prices. Of the latest attempt by Hunt, analystspredicted it would prove to be only an opening bid. Berkley entered2000 with gas production approaching 150 MMcf/d and a formidablearray of growth prospects including operations in the prolific FortLiard area of the southern Northwest Territories.
Carolyn Davis, Houston
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