Delek Drilling becomes NewMed Energy (company PR pic: Shlomi Yosef)
NewMed Energy, a unit of Israel’s Delek Group Ltd, is merging with Capricorn Energy plc, a British firm that is already traded on the London Stock Exchange. In what is being described as a “reverse merger,” the two companies will combine to form MENA gas and energy champion which they say will be one of the largest upstream energy independents listed on the London exchange.
NewMed was formerly known as Delek Drilling, but changed its name in February, 2022.
Investopedia explains that reverse mergers are an attractive strategic option for managers of private companies to gain public company status. Reverse mergers typically occur through a simpler, shorter, and less expensive process than a conventional IPO. So, one company wants to go public, but instead of holding an IPO it mergers with another firm that is already public.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at [email protected].
Thank you.
The companies proposed to pay a cash special dividend of $620 million to existing Capricorn shareholders.
The Combination will be effected by Capricorn acquiring all of the partnership interests in NewMed in consideration for the issue of new Capricorn shares to NewMed unitholders based on an exchange ratio of 2.337344 New Capricorn Shares for every NewMed participation unit.
The Combination will result in Capricorn shareholders holding approximately 10.3 per cent of the share capital of the Combined Group and NewMed unitholders, together with NewMed’s current general partner, holding in aggregate approximately 89.7 per cent of the share capital of the Combined Group at completion of the Combination. The Combined Group will trade under the name NewMed Energy and expects to retain its existing Premium Listing on the London Stock Exchange (“LSE”).
The board of directors of Capricorn (the “Capricorn Board”) believes that the Transaction is in the best interests of Capricorn Shareholders and intends to recommend unanimously that Capricorn Shareholders vote in favour of the resolutions to be proposed by Capricorn at the shareholder meeting to be held to approve the Transaction. Accordingly, the Capricorn Board has unanimously decided to withdraw its intention to recommend the Tullow Combination.
The board of directors of confirmed its intention to recommend unanimously that NewMed unitholders vote in favor of the resolutions to approve the Combination. Delek Group, NewMed’s principal unitholder, which holds voting interests in c.54% of NewMed’s Units, has entered into an irrevocable commitment to vote its Units in favor of the Combination.
The Board of the Combined Group will have a clearly defined governance structure in line with the UK Corporate Governance Code. Whilst it is currently proposed Simon Thomson, the CEO of Capricorn, will become the transitional Chair of the Combined Group, to provide continuity through the Combination process, a search for an independent Chair will be undertaken and it is intended all UK corporate governance principles will be complied with in due course.
As well as the Chair, the Board of the Combined Group will comprise Yossi Abu as CEO, James Smith as CFO and 7 Non-executive Directors, with 2 expected to be representatives of the Delek Group and 5 expected to be independent non-executive directors (2 of which will come from the existing Capricorn Board). Accordingly, a majority of the directors of the Board of the Combined Group, excluding the Chair, will be independent.
Nicoletta Giadrossi, Chair of Capricorn, said, “The Board has engaged in a robust and dynamic process to evaluate options for Capricorn and considered a broad range of external factors and market conditions. The Combination with NewMed and a cash special dividend represents the delivery of significant value for Capricorn shareholders. We believe this is a compelling transaction which combines near term value realization with ongoing participation and value creation in a world class gas company.”
Yossi Abu, CEO of NewMed said, “By combining with Capricorn we are creating a leading MENA gas and energy company, whilst significantly benefiting the shareholders of both companies. With 2P & 2C reserves and resources of approximately 11.8 TCF, predominantly gas from Leviathan, low-cost and highly cash generative production, the Combination creates a true regional energy champion.”
Abu also promised that “secure, sustainable, and long-life cash flows will allow the Combination to offer a compelling mix of capital distributions to shareholders and growth potential.”
