NEON Energy has abandoned a planned merger with MEO Australia, instead agreeing to a revised proportional takeover bid from private company Evoworld, based in Perth.

Evoworld, which currently holds a 19.99 per cent stake in Neon, will bid 3.8 cents per share for half of the shares in Neon it does not currently own – equivalent to 40.05% of the company’s total issued capital.

When completed, this would leave Evoworld with a 59.95% stake in Neon.

The offer is conditional on other Neon shareholders passing a resolution to approve the offer – with Neon planning to hold a general meeting as soon as possible.

Members of the Neon board have unanimously committed to voting in favour of the offer – revised from a previous bid of 3.5 cents for 30% of the shares it did not own.

Following the decision, Neon director John Lander has resigned from the board, with fellow director Ken Charsinsky to stand down once Evoworld acquires 30% of the Neon shares on issue.

Ross Williams was appointed to the board as a non-executive director following Mr Lander’s resignation.

Neon’s proposed merger with MEO Australia would have seen MEO shareholders receive 0.7369 Neon shares for each share they held – with the shareholders of each company to hold 50% of the merged entity.

After Neon announced it would recommend Evoworld’s revised offer, it scrapped the merger agreement – paying MEO a penalty fee of $400,000.

In an announcement, MEO said the scrapping of the deal would leave the way clear for Mosman Oil and Gas to proceed with its intended takeover bid for MEO, which the company had considered inferior to the Neon merger.

Mosman, which is listed on the London Stock Exchange’s Alternative Investment Market, had offered one of its shares for every 20 held by MEO.

In a statement issued before the Neon announcement, MEO said Mosman’s cash balance and the fact it was listed on the AIM were factors in its decision to recommend the Neon merger.

Mosman is set to serve MEO with its bidder’s statement in early February, which the company said it would consider in light of the termination of the Neon agreement.

MEO has also advised its shareholders to take no action on Mosman’s bid until directors make a formal recommendation.