“Pacific Rubiales has, in recent weeks, made it abundantly clear that, as an independent company, it will necessarily have to focus on cost-cutting, asset sales and debt reduction”, David Dudlyke, an analyst at Dundee Securities Ltd., said in a note in which he cut his target price to C$3. O’Hara and its allies, which control 19.8 per cent of the shares, complained that the bid undervalued Pacific Rubiales. The maker of lunchmeat and vehicle parts slumped 10 percent since being identified as a bidder in May, a sign of investor dismay even as Pacific Rubiales stakeholder O’Hara Administration Co. lambasted the C$6.50-a-share bid as too low.
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“We see this as positive for Alfa, ” Ana Sepulveda, an analyst at Invex Casa de Bolsa SA, said in a telephone interview in Mexico City, Bloomberg reported.
As for investors, they headed for the hills: the shares were off by more than $2 and are now trading in the $3 range. (TSE:PRE) from C$6.50 to C$3.75 in a report issued on Thursday, AnalystRatings.Net reports. Pacific Rubiales Energy Corp. now has an average rating of “Hold” and a consensus price target of C$6.81. 11,146,489 shares of the company’s stock traded hands.
Alfa’s exit means Pacific Rubiales executives now will have to restart a turnaround effort, according to Nathan Piper, an analyst at RBC Capital Markets.
Pacific Rubiales said it will continue with its plans to “reduce operating costs, divest non-core assets, reduce debt and continue to pursue Mexico energy opportunities with our preferred joint venture partner Alfa”.
In June, Matthew Jurecky, GlobalData’s head of oil and gas research and consulting referred to the ALFA/Harbour Energy announcement to acquire Pacific Rubiales as the Americas’ top deal in May.
In other Pacific Rubiales Energy Corp. news, insider Ipc Investments Corp. purchased 1,000,000 shares of Pacific Rubiales Energy Corp. stock in a transaction that occurred on Thursday, May 7th. O’Hara said today in a statement that it was “pleased” the deal was terminated.
Since May, Pacific Rubiales and the companies seeking to buy it have tried to convince shareholders that a takeover was preferable to the struggle it would face alone. “As one of the Company’s largest shareholders, we look forward to engaging with various stakeholders and playing a constructive role in the Company’s future”, it added.
The company did not provide a reason for the termination. The deal would have had ALFA and Harbour Energy takeover the remaining 81.05% stake of Pacific Rubliales that were not already held by ALFA.
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Harbour Energy, a joint venture of Noble and EIG Global Energy Partners, operates upstream and midstream energy assets globally.
