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The TransGlobe Energy Corp board on Friday continued to recommend that shareholders vote for the merger with Vaalco Energy Inc.
TransGlobe is a Calgary, Canada-based oil explorer and producer with interests in Canada and Egypt. Vaalco is a Houston, Texas-based exploration and production focused on West Africa.
The continued favourable recommendation came after the board rejected the ‘spurious’ claims made by Horizon Partners in a press release published on Tuesday which, the company claimed, ‘misrepresent’ the combination with Vaalco. Horizon Partners is a major shareholder in TransGlobe.
Horizon Partner's press release said the ‘proposed transaction severely undervalues the company...Vaalco shares (have) declined by approximately 25% since the proposed transaction was announced’.
Horizon claimed that TransGlobe is ‘a significantly more valuable company than Vaalco’ and anticipated that through pursuing alternatives - such as selling the company's Canadian assets and returning the value to shareholders - TransGlobe's share value could increase to between C$9.11 and C$9.73 from the C$4.10 that TransGlobe shares are valued at in the deal.
TransGlobe said that Horizon's comparisons of Vaalco and TransGlobe was ‘fundamentally flawed.’
TransGlobe suggested that Horizon made ‘several unfounded statements with respect to the public market value of Vaalco, without providing sufficient justification for its statements.’
The company said a sale of the company's holdings in Canada, as Horizon recommended, will ‘destroy value for TransGlobe shareholders.’
TransGlobe described Horizon's C$9.11to C$9.73 per share value as ‘unrealistic and a misleading basis for making strategic decisions’ as it is significantly more than ‘any recognised benchmark in the market’.
Chair Dave Cook said: ‘TransGlobe shareholders should reject Horizon's efforts to misrepresent the transaction and impose short-termism and financial engineering, which will be disruptive to TransGlobe's business strategy and have negative consequences for the Company, its stakeholders and shareholder value.’
Shares in TransGlobe were trading 4.5% lower at 253.00 pence each in London on Friday afternoon.
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