Mexico’s Alfa SAB and partner Harbour Energy Ltd dropped their plans for the acquisition of Pacific Rubiales Energy Corp after the driller’s largest shareholder turned down a takeover offer once valued at as much as $1.7 billion.
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While the Pacific Rubiales board approved the transaction, the offer created significant shareholder opposition.
Harbour Energy CEO Linda Cook said: “As previously stated our offer of C$6.5 per share was full, fair and final, and therefore we have no plans to revise the proposal”.
The maker of lunch meat and vehicle parts fell 10 per cent since being identified as a bidder in May, a sign of investor dismay even as Pacific Rubiales stakeholder O’Hara Administration Co slammed the C$6.50-a-share bid as too low.
The offer failed to win over O’Hara Administration, which along with its affiliates owns about 19.5% of Pacific Rubiales. It tapped Lazard Asesores Financieros in the days after the offer to rally opposition to the bid, and said last week that about 60% of proxy votes had been cast against the deal. The bid needed the support of two-thirds of shareholders to succeed.
Toronto-based Pacific Rubiales, which mainly operates in Colombia, said Wednesday that it agreed with a request from those two companies to terminate the deal the parties entered into on May 20.
The company said it will continue to reduce operating costs, divest non-core assets and reduce debt. Without the takeover, analysts are focusing on how Pacific will shore up its finances given what the company itself has called “notable risks” that include the slump in oil prices, the loss of its main field next year and challenges at other Colombian projects, according to a June 18 statement.
Harbor is joint-owned by Asian commodity trader Noble Group and private equity firm EIG Global Energy Partners.
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As for investors, they headed for the hills: the shares were off by more than $2 and are now trading in the $3 range.
