InterOil bidder Exxon will meet shareholders next week, support expected
ExxonMobil [NYSE: XOM] will next week meet with the shareholders of USD 2.4bn takeover target InterOil [NYSE: IOC] following the withdrawal of Oil Search’s [ASX: OSH] rival offer, a person briefed on the situation and an investor said.
Earlier Thursday Oil Search said it does not intend to submit a revised offer for InterOil, which is developing a major LNG project in Papua New Guinea. This follows notification on 18 July from InterOil that it had received a ‘Superior Proposal’ from ExxonMobil and intended to change its recommendation and enter into agreement with the US major.
The person said Exxon’s USD 45 per share scrip offer plus contingent resource payment is an improvement on the USD 40.25 p/s Oil Search scrip bid which had already been well received by InterOil shareholders. Exxon’s share offer has the added benefit for InterOil’s US retail shareholders of being from the same country and from a company with a highly liquid stock.
Retail shareholders are thought to hold around 20% in InterOil. This has dropped 5-10 percentage points since Oil Search’s offer. Hedge funds are estimated to make up around 15% of the register.
Since InterOil announced on 18 July its intention to change its recommendation in favour of Exxon’s bid about 8% of its stock has traded, the bulk being driven by merger arbitrage hedge fund buying.
Shares in InterOil are trading above the USD 45 p/s share bid factoring in the offer’s CRP component. The scheme meeting for Exxon’s offer is likely to be held in the second half of September. The person said no new material information will emerge when InterOil files its deal documents later today (Thursday).
This news service has reported that the structure of Exxon’s offer is similar to Oil Search’s and that PNG regulatory obstacles are not considered likely as the government is keen to see the companies develop their PNG hydrocarbon assets.
InterOil declined to comment. Exxon was unable to comment immediately.