ELAND Oil and Gas boss George Maxwell has hailed the success the Aberdeen-based firm has achieved in Nigeria after a £382 million takeover bid for the company which values his holding in the firm at around £1m.
Directors of Eland have recommended shareholders accept a 166p per share cash offer for the company made by Seplat of Nigeria.
The bid values the holding of sheep farmer and City financier Richard Griffiths at £21.2m.
Mr Griffiths was an early investor in Eland, which has developed a significant oil and gas production business centred on the Niger Delta.
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Seplat said the acquisition will support its drive to become the leading Nigeria-focused exploration and production firm.
The takeover bid provides vindication of the belief the team led by Mr Maxwell have shown in the Nigerian oil business.
AIM market-listed Eland has been required to grapple with security challenges in Nigeria while coping with the fallout from the plunge in the crude price since 2014.
“Eland has, in a period which has seen a significant cyclical downturn in our industry, outperformed most of its peers,” said Mr Maxwell.
He said the recommended offer from Seplat represented the culmination of a very successful journey by Eland.
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The prospect of the takeover, which is subject to shareholder approval, may be regarded with some concern in Aberdeen. Eland employs 45 people in the city.
Seplat said it recognised the importance and value of the skills and experience of existing Eland employees but will complete a review of the business within 12 months of completing a takeover.
“Seplat will make an assessment of the strengths and fit of Eland’s management team and employees,” it said, adding “Any employees affected by the review, the number of whom is expected to be non-material, will be treated in a manner consistent with Seplat’s high standards, culture and practices.”
Seplat will consider whether it needs to retain Eland’s Aberdeen head office.
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The company expects to cancel Eland's AIM listing following the takeover with an associated impact on headcount it expects will be limited.
It is expected the non-executive Eland directors will resign as directors of the firm on completion of the acquisition.
Eland's chairman Russell Harvey said the takeover would allow shareholders to realise the value created by the firm, with the offer pitched at a premium of around 33 per cent to the 125.2p weighted average price of Eland shares over the last three months.
But the takeover of another listed company in Scotland would be greeted with regret in some quarters.
Having listed companies based in Scotland helps keep investors interested in the country. They generate valuable work for firms in sectors such as law and accountancy.
The fall in the pound since the Brexit vote in 2016 has made it cheaper for overseas buyers to make bids priced in sterling.
A veteran of the North Sea oil and gas business, Mr Maxwell founded Eland with Les Blair after the men worked in the sector in Africa with the former Addax.
They identified potential in the OML 40 licence in the Niger Delta although Royal Dutch Shell had stopped production on it in 2006 amid security concerns.
Eland bought a stake in OML 40 in 2012 in a deal worth around £95m and restarted production from the licence in 2014. Production was disrupted by the closure of the Forcados export terminal for 15 months due to sabotage, sending Eland $31m into the red in 2016.
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However, Eland said last month it had maintained reliable operations on OML 40 in the first half of the current year during which it made $40m operating profit.
Mr Maxwell has 549,269 shares in Eland. He held options to acquire 4.5m shares, subject to performance conditions, at the date of the annual report in March. Seplat said it would make appropriate proposals to the holders of options and awards.
Mr Griffiths has 12.8 million shares.
Eland shares closed up 35.4p at 164.6p.
Seplat has won irrevocable undertakings from the holders of 60.2% of Eland shares, including directors and Mr Griffiths, to accept its offer.
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