Rinehart’s Hancock Energy will pay 36c if it gets 40pc Warrego acceptances
MinRes snapped up 15 per cent of Warrego at 35c and now there’s speculation it could capitalise on Hancock Energy’s sweetened 36c-a-share offer.
Mineral Resources could deliver effective control of Warrego Energy to Gina Rinehart’s Hancock Energy, after the company’s dramatic intervention into the ongoing takeover battle this week.
The Chris Ellison-led company is understood to have bought about 15 per cent of Warrego stock on Wednesday at 35c a share, including Regal Funds Management’s 9 per cent stake and shares held by other institutional investors.
Mrs Rinehart’s Hancock Energy immediately added 8c a share to its cash offer on Thursday, taking its bid to 36c, and said it would pay the full amount if it gained control of more than 40 per cent of the Warrego register.
About 25.9 per cent of Warrego stock had been accepted into the offer by December 30, meaning that MinRes could effectively hand control of Warrego to Mrs Rinehart if it flipped its shares into the Hancock bid at the small premium on offer.
MinRes is yet to comment on its dramatic intervention into the bidding war for the Perth Basin gas play, but its market move deals a major blow to the all-scrip offer by Hancock rival Strike Energy, which has offered one of its shares for each Warrego share on offer.
Strike owns 19.9 per cent of Warrego, and until MinRes’ foray into the market believed it was likely to pick up another 20.5 per cent of the company’s shares when its offer opens next week.
But despite the 28.5 per cent lift in the value of Hancock’s offer for Warrego, the market clearly still does not believe the bidding war is done, lifting the value of the company’s shares to a 38 close on Thursday.
Strike shares also benefited from the twin moves, with its shares up 4c to 37.5c on Thursday, following a “clerical error” at the hands of MinRes’ lawyers, who put Strike’s Australian Business Number in place of that of Norwest Energy in the target statement for its own takeover tilt at Norwest.
While a spokesman for MinRes dismissed the mistake as a “clerical error in drafting”, the mistake began a fresh round of speculation the company could be targeting Strike Energy as part of its own gas plans.
At stake is the development-ready West Erregulla gas project in WA, in which Strike and Warrego each own a half share, which the companies say could produce 87 terajoules a day of gas if approvals are granted.
Like MinRes, Strike has plans to use the gas for future downstream projects, having floated the prospect of building a $3.5bn urea plant in WA using gas produced from its local acreage.
Mr Ellison, who opened MinRes’ all-scrip offer for Norwest on Wednesday, told investors in December he planned to use the company’s gas production to power its WA mining operations, but eventually move into downstream manufacturing of fertilisers – urea and ammonia – rather than selling the gas not needed for its own domestic operations, into overseas markets.
While MinRes’ intentions for its Warrego stake are not yet clear, the company has long had an extensive relationship with Mrs Rinehart’s WA mining operations. Currently the two companies are involved in a joint venture to develop new iron ore shipping berths at Port Hedland, and have an agreement for the shared use of railway facilities owned by Mrs Rinehart’s Roy Hill mine to help open up Pilbara deposits controlled by MinRes.
That agreement is the ultimate result of another takeover tussle, for Atlas Iron, in which both MinRes and Hancock were players.
MinRes launched its bid for Atlas in 2018 as the company struggled with low iron ore prices, targeting not just its mining operations but the company’s longstanding agreement with the WA state government to allow the development of a new shipping berth at Port Hedland.
Within months MinRes was forced to bow out of the friendly takeover tilt for Atlas after Andrew Forrest’s Fortescue Metals Group built a 20 per cent blocking stake in the company, eventually sold to Hancock Prospecting’s $390m cash bid.
That year MinRes also dipped out of its tilt at building a significant onshore gas presence in the Perth Basin through a takeover offer for ASX-listed AWE after Japanese giant Mitsui topped the company’s cash and scrip bid with a $602m all-cash offer.
MinRes shares closed up 0.8 per cent, or 62c, at $78.12.
