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Hurricane Energy PLC on Wednesday urged shareholders to vote against an unsolicited indicative takeover offer it received, citing a low premium to its share price as it launched a formal sales process.
The Surrey-based oil and gas producer in fields offshore west of Shetland said the indicative offer from an unnamed bidder offers Hurricane 7.7 pence per share, a premium of 13% from its 6.8p per share closing price of Tuesday.
Hurricane said the premium was too low.
The board of Hurricane Energy recommended against the indicative offer to its shareholders.
Hurricane Energy shares jumped 19% to 8.07 pence each, surpassing the offer's valuation on Wednesday afternoon in London, while Crystal Amber Fund Ltd, which owns 29% of Hurricane shares, saw its shares rise 10% to 109.00p each.
Meanwhile, the company announced it decided to launch a formal sales process to gauge whether a bidder is prepared to offer Hurricane a value that it deems attractive.
Hurricane noted that it is debt free with forecast year-end net free cash of $118 million. It added that its large shareholder and activist fund manager Crystal Amber Fund aims to monetise the value of its 29% shareholding in Hurricane.
Regarding the possibility of no takeover, Hurricane said: "In the event that the FSP does not result in a transaction, the board intends to commence a significant capital return programme with up to $70 million, equivalent to 3.1 pence per share, to be returned to shareholders in the first quarter of 2023, upon completion of a capital reduction. Following that, and in the absence of more favourable alternatives, further distributions could then be made during 2023 and beyond."
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