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Capricorn plc today notified NewMed Energy, mled by CEO Yossi Abu, about major changes in the company’s management, while next week’s discussions by the board of directors about the merger has been postponed. Capricorn’s move significantly reduces the likelihood in NewMed Energy’s estimation that the merger it reported at the end of September will go ahead.
As part of the merger agreement, Capricorn was supposed to distribute to its shareholders a special dividend in cash and related payments, amounting to $620 million dollars. Capricorn would then offer 2.337344 new shares for every NewMed participation unit held. Under this ratio, the owners of the existing units of New-Med would hold 89.7% of the shares of the consolidated company, while the shareholders of Capricorn would hold the remaining 10.3%. Thus, the partnership will become a private corporation fully owned by Capricorn.
Five of Capricorn’s nine directors resigned yesterday. Since the merger agreement was made in September, Capricorn’s share price has risen 16%, giving it a market cap of $950 million.
NewMed Energy said that Capricorn had said that the board of directors meeting to discuss the merger had been postponed by three weeks to give the new board members an opportunity to review the deal and consider alternatives.
