Beach exits bidding war with Hancock Energy for Warrego; latter says take no action—yet

Fri 09 Dec 22, 10:13am (AEST)
A hand belonging to a man in a suit hands over hundreds of dollars of Australian cash to an unseen recipient
Source: iStock

Key Points

  • Warrego shareholders advised to delay acceptance of Hancock offer until 31 January deadline in case of better offer
  • Warrego has now dropped its preferred support for the Beach offer
  • Strike Energy, which increased its stake in Warrego to 19.9% this week, will not limit the availability of the company to Hancock

After one week of an arms-race-style bidding war between Kerry Stokes-backed Beach Energy (ASX:BPT) and Gina Rinehart’s Hancock Energy fo acquire Warrego Energy (ASX:WGO), Beach has declared it will not attempt to overtake Hancock’s 28cps offer for Warrego. 

Warrego, in turn, has today dropped the recommendation it made to its shareholders earlier this week that favoured an earlier Beach proposal. 

All in all, Warrego is now advising its shareholders to take no action on the Hancock Energy takeover at this time, given it runs into the end of January. 

Noting that ASIC would only allow Hancock to withdraw its offer in a narrow set of circumstances, in layman’s language, Warrego has today told its shareholders to wait around and see if a better offer comes along. 

And if it doesn’t, well, accept the Hancock offer.  

Or, in Warrego’s language: 

“In any event, the Warrego Board advises shareholders to take no action in relation to the Hancock Takeover Offer until they receive Warrego's Target's Statement in relation to Hancock Takeover Offer.” 

Warrego shareholders ought to know the early acceptance of the Hancock offer would thereby see them contractually obliged to sell their Warrego shares to Hancock Energy, which would then be unretrievable should a superior takeover offer trigger. 

Beach back to basics 

Writing to its own shareholders and the market at large, Beach today highlighted its decision not to ratchet up the tension anymore with Hancock, deciding to bow out of the race. 

“The bidding process reinforced our view the value of our acreage in the Perth Basin encourages us to expand our current exploration program,” Beach chief Morné Engelbrecht said. 

It will use the money it was (presumably) putting aside for a possible takeover to ramp up its exploration activities into 2023.

Strike’s 20% stake won’t hurt deal

On Wednesday, Strike Energy (ASX:STX) increased its stake in Warrego to 19.9%, which sent shares for the former flying. 

“[The company] notes Strike has increased ownership to 19.9%, and that Strike’s Board has not formed any intention with regards to any future transaction,” Warrego wrote. 

“This increase in ownership of Warrego does not impact the Hancock offer which is not subject to any minimum acceptance condition.”

Warrego's one month returns are currently up over 90%
Warrego's one month returns are currently up over 90%


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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