Serica Energy (LON: SQZ) has issued a lengthy statement denouncing the bid from smaller rival Kistos (LON: KIST) as “significantly undervaluing” the company.
The firm once again “strongly advised” shareholders not to take any action in the regulatory news announcement issued Wednesday.
Kistos, the vehicle of North Sea dealmaker Andrew Austin, publicly announced a £1bn cash and shares proposal this week for Serica.
In a statement today, Serica Energy said the Kistos proposal is an “opportunistic reaction” to the recent disconnect in gas prices between the UK and Europe.
It also “does not reflect the underlying value of the company’s assets” and upside potential, the board said.
The statement goes on to say the Kistos bid relies on new debt and utilisation of Serica’s own cash balances, would increase exposure to market risk, and reduce net cash of the combined entity by around £700m.
Serica listed its own strong points, apparently undervalued by Kistos, such as the spudding of the North Eigg exploration well this week – targeting 60 million barrels – and Serica’s share price increasing 1,120% over the last five years.
Serica said: “The Board will not recommend any deal on terms which it believes are unattractive to its shareholders and wider stakeholders.”
Instead, the firm said that a counter-bid made by Serica for Kistos – which has been rejected – would deliver “advantages of scale and diversity”.
‘North Sea Champion’
That bid, for 483 pence a share, was rejected by Kistos as it was not at a “recommended value” and no Kistos board members would be retained.
Under takeover rules, both companies have until August 9 to announce firm intention to make offers, or that they will not.
Serica has a market capitalisation of £829m, versus the Kistos market cap of £384m.
This week Kistos said the combination of the London-listed firms would create “a leading independent North Sea champion”.
Elsewhere, Kistos completed a £123 million deal for 20% in the Greater Laggan Area in the West of Shetland, operated by TotalEnergies.
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