Hardman board okays friendly takeover

HARDMAN Resources looks set to be taken over by London-listed Tullow Oil in a $A1.47 billion deal that will see the company quit the Australian Stock Exchange.
Hardman board okays friendly takeover Hardman board okays friendly takeover Hardman board okays friendly takeover Hardman board okays friendly takeover Hardman board okays friendly takeover

This morning, Hardman said it had entered an agreement for the proposed acquisition by Tullow of all Hardman shares via a scheme of arrangement.

“The Hardman board believes that the Tullow offer is in the best interests of Hardman shareholders,” the directors said in a statement.

“In the absence of a superior proposal, the directors unanimously recommend that Hardman shareholders vote in favour of the scheme of arrangement and each of the directors intends to vote any shares they hold in favour of the Tullow offer at the scheme meeting.”

The proposed transaction is subject to several conditions, including Hardman shareholder approval.

Under the Tullow offer, Hardman shareholders will receive $2.02 cash per share, a 60% premium to the volume weighted average price of Hardman shares in the week prior to the agreement. This offer values Hardman at $1.47 billion.

But Hardman's shares have since soared past the cash offer, starting the day's trading up 60% or 78c at $2.09. At 1pm (EST), HDR had settled slightly to $2.03.

Tullow will also provide a share alternative to Hardman shareholders who wish to participate in the combined group. Hardman shareholders may elect to receive 0.22289 new Tullow shares for each Hardman share, subject to a maximum of 65 million new Tullow shares.

This share alternative is available for some or all of the shares owned by each Hardman shareholder. Any oversubscription to the share alternative will be subject to a scaleback pro-rata based on an exchange rate of £1 to $A2.5315 and based on the five trading days to, and including, September 22, which was the last trading day prior to the agreement being reached.

The new Tullow shares will not be listed on the ASX but will trade on the London Stock Exchange.

An explanatory memorandum containing information relating to the proposed transaction and reasons for the directors’ recommendation is expected to be sent to Hardman shareholders in mid-November.

KPMG will be engaged to prepare an independent expert’s report for Hardman shareholders and provide its opinion as to whether the proposed transaction is in the best interests of Hardman shareholders. This report will be included in the explanatory memorandum.

The meeting at which Hardman shareholders will vote on the scheme of arrangement is expected to be held in mid-December in Perth, Western Australia.

Hardman chief executive and managing director Simon Potter said Tullow’s offer was at an attractive premium to Hardman’s recent share price and captured potentially several years of the risked upside in Hardman’s portfolio.

“Further, it provides investors with the choice of certain value now via a cash offer or, through the scrip alternative, retaining exposure to the Hardman asset inventory with the additional leverage offered by an E&P company of substantially greater scale,” Potter said.

“We know Tullow well through our joint venture in Uganda. It is a highly successful E&P company with a strong exploration ethos, an excellent operational record and a broad range of assets in Africa, Asia and OECD countries.

“The board has concluded that Tullow’s offer has the value and flexibility to appeal to Hardman’s varied shareholder base, and we recommend the offer to our investors.”

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