Capricorn Energy Cancels Merger with NewMed Energy Following Shareholder Pressure

Shadia Nasralla and Aby Jose Koilparambil
Wednesday, February 15, 2023

British oil and gas producer Capricorn Energy on Wednesday pulled the plug on its planned merger with Israeli gas group NewMed Energy after months of shareholder pressure that also toppled Capricorn's leadership.

Activist investor Palliser and some of Capricorn's biggest shareholders had publicly opposed the tie-up, and major proxy advisers also recommended rejecting the plan.

Earlier this month, almost the entirety of Capricorn's board, including its chief executive, were replaced by new directors proposed by Palliser. The new directors announced a strategic review of the company.

"Based on its work to date in respect of the Strategic Review and taking into consideration the views expressed by shareholders on the NewMed transaction, the board has resolved to advise shareholders to vote against the NewMed transaction," Capricorn said in a statement.

"This action is necessary to enable the consideration of all potential strategic options for the Company, including the material return of capital to shareholders and potential engagement with respect to alternative options."

NewMed said in a statement the two companies had "mutually agreed" to terminate the transaction.

A vote by Capricorn shareholders on the deal planned for Feb. 22 will not take place, Capricorn said.

Under the NewMed deal, Capricorn would have paid out a $620 million special dividend - sourced mainly from an Indian tax payout - to its shareholders, which the previous leadership said would be cut to around $500 million without the merger.    

The deal is the second transaction Capricorn has scrapped since September, when it ditched a merger plan with Tullow Oil, also met by strong investor opposition, to pursue the tie up with NewMed.

Vocal opponents of the NewMed deal and Capricorn shareholders Palliser, Madison Avenue, Kite Lake and Legal & General Investment Management did not immediately respond to requests for comment.

Capricorn shares were down 0.4% at 249.15 pence at 1129 GMT, compared with a broader index of oil and gas firms down 0.2%.

(Reuters  - Reporting by Aby Jose Koilparambil in Bengaluru and Shadia Nasralla in London; Editing by Devika Syamnath and Mark Potter)

Categories: Energy Mergers & Acquisitions Middle East Industry News Activity Africa Mediterranean Sea

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