Meo, Neon merging

November 5, 2014

Australian companies Neon Energy and MEO Australia announced they entered into a merger implementation agreement, under which the companies have agreed to merge by way of an MEO scheme or arrangement.

Under the arrangement, MEO shareholders will receive 0.7369 Neon shares for each MEO share they hold. Following, Neon shareholders and MEO shareholders will each hold 50% of the merged group.

MEO says the transaction will combine Neon’s cash resources with MEO’s diverse portfolio to create a well-capitalized junior E&P company, positioned to take advantage of existing opportunities within the combined asset and new ventures portfolio, as well as further business development opportunities in the E&P sector.

Following the implementation of the merger, the group will have a balance sheet with a pro forma net cash of US$32.2 million.

“Through a disciplined approach to acquisitions and ruthless focus on costs, our goal is to materially enhance the net asset value of the group and create an attractive investment destination for shareholders seeking exposure to the E&P sector,” says Alan Stein, Neon chairman. “We think this is in stark contrast to Evoworld’s offer to opportunistically acquire Neon shareholders’ equity and gain control of Neon at a discount to the company’s cash backing.”

“Consolidation amongst emerging E&P companies is long overdue and makes strong strategic sense,” says Stephen Hopley, MEO acting chairman. “The Merger is also expected to result in a sharp reduction in the combined cost base of the Merged Group and are positioning towards a production oriented strategy and strengthened platform from which to deliver future shareholder returns.”

Image from MEO.



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