CANADA’s Baytex Energy Corporation’s A$1.84 billion swoop on Aurora Oil & Gas looks set to go ahead after an expert deemed the takeover offer fair and reasonable.
Australia-listed Aurora, which is focused on exploiting Texas’s natural gas resources in the Eagle Ford Shale, recommended shareholders vote in favour of the scheme back in February when the deal was announced.
The company now has the back up of an independent expert appointed by the Aurora board to review the transaction, determining the deal worth taking up.
“Grant Samuel & Associates Pty Limited, has concluded that the scheme is fair and reasonable and in the best interests of Aurora shareholders,” Aurora announced.
The endorsement of Baytex’s offer follows the issuance of orders by the Federal Court of Australia approving dispatch of the scheme booklet ahead of a planned meeting in Perth to vote on the deal.
The independent expert valued Aurora at A$3.76 – A$4.29 per share.
The scheme consideration is at the upper end of the independent expert’s valuation range and represents a 56 per cent premium to $2.62, being the last closing price of Aurora’s shares on ASX on 6 February 2014 prior to the offer being announced.
If the scheme is approved, shareholders will receive a total cash payment of $4.10 per Aurora share.
Aurora’s directors have considered the advantages and disadvantages of the proposed scheme and have reiterated its recommendation that shareholders vote in favour of the Baytex bid.
Aurora executive chairman Jonathan Stewart warned in a letter to shareholders that the value of the company would decline if the offer wasn’t taken up.
“If the scheme is not implemented and no superior proposal emerges, your directors consider the Aurora Share price is likely to fall,” he said.
“In contrast, if implemented the scheme consideration delivers certain cash proceeds to be paid to Aurora Shareholders in June.
”Shareholders will vote on the deal on 21 May, with the merger expected to be implemented in mid-June.