Gina Rinehart takes control of Warrego, with a hand from MinRes

Billionaire Chris Ellison’s Mineral Resources has made a paltry gain from selling its large stake in Warrego Energy to buyout bidder Hancock, owned by fellow WA magnate Gina Rinehart.

Billionaire Chris Ellison’s Mineral Resources will trouser a meagre $1.24m by selling its crucial stake in Warrego Energy to Gina Rinehart’s Hancock Energy, and handing the latter control of the company.

Hancock has been battling Warrego’s Perth Basin joint venture partner Strike Energy for control of the company since a bidding war kicked off in November.

Hancock is willing to pay 36c a share for the company - as long as it receives acceptances for more than 40 per cent of its shares - while Strike was offering a one for one scrip deal.

MinRes appeared on the register in early January with an initial 200 million share stake, bought at an average price of 34.8c, following up with purchases at 38.6c, 38.7c and 39.2c to take it to 19.17 per cent.

MinRes was adamant that the effective blocking stake for either of the Strike and Hancock takeover bids was a “strategic stake” before tipping it into the Hancock bid.

MinRes paid an average of 35.47c for each of its shares, meaning it will make just 0.53c per share out of the deal, which comes to $1.24m.

MinRes has been contacted for further detail on its rationale for getting involved in the takeover tussle, and why it believes the 36c per share from Hancock provides a better outcome than taking the Strike scrip offer, selling on-market or simply sitting on the register.

Once the MinRes shares are factored in, Hancock says it has ownership and acceptances for 50.54 per cent of Warrego making it the company’s controlling shareholder.

“Hancock considers any prospect of a new competitor takeover offer for Warrego is negligible, particularly given Hancock has become Warrego’s controlling shareholder,” Hancock said.

“Hancock considers current share prices of Strike and Warrego are largely being supported by Hancock’s offer, with their prices rising in step with Hancock’s key announcements over the past two months.

“Now that Hancock has become Warrego’s controlling shareholder, and Strike has confirmed its scrip offer is its ‘best and final’ offer, Hancock expects Strike’s and Warrego’s share prices to continue to fall below 36c and will likely further decline significantly once Hancock’s offer closes.”

Hancock also warned that Warrego shareholders who hung on to their shares might face “significantly reduced trading liquidity and may have difficulty realising an equivalent cash value for their shares’’.

Strike shares were unchanged at 35.5 in afternoon trade on Monday while Warrego stock was 1c higher at 36c.

Also on Monday Warrego told the ASX that its non-executive chairman Greg Columbus had sold his 42.2 million shares into the Strike offer.

Mr Columbus, in a target’s statement released in late December when the Hancock bid was sitting at 28c a share, recommended shareholders take up the Strike bid at that time while three other directors including company founder Dennis Donald backed the Hancock offer.

Strike managing director Stuart Nicholls said on Monday the company still believed its offer was the more compelling, and the board would now consider its position as to the 24.91 per cent shareholding it now controlled.

“Our offer is open until the 13th of February,’’ he said. “We still consider our offer to be the superior one given the extended and long-term exposure to the Perth Basin on which Strike’s offer is premised.

“We see our holding in Warrego Energy as very strategic, and off the back of these developments we will review our position and the board will come to a conclusion as to what we’d like to do next.’’

MinRes also has a scrip-based takeover on the table for fellow Perth Basin gas player Norwest Energy, and on Monday told the ASX it had moved to a 26.68 per cent stake in the junior.

That offer is unanimously recommended by the Norwest board in the absence of a better offer.

Hancock said on Monday its offer for Warrego was automatically extended and will remain open for acceptance until 7pm AEDT on February 24.

The takeover battle for Warrego kicked off on November 10 when Strike announced its scrip bid, quickly followed by a 20c a share cash offer from Beach Energy.

Beach upped its offer to 25c a share in early December but dropped out of the race soon after that, once Hancock upped its bid to 28c per share.