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fusion takeover

  1. Tokyo Jo

    359 Posts.
    Sterling Energy buys 20% stake in Fusion
    By Joanna Chung in London
    Published: September 19 2003 20:18 | Last Updated: September 19 2003 20:18

    Sterling Energy, the oil and gas company, on Friday acquired a 20.4 per cent holding in rival Fusion Oil & Gas, bringing it one step closer to acquiring the company.

    Sterling acquired the holding, the largest stake in Fusion, by buying Westmount Resources, a subsidiary of Westmount Energy, in an all-paper deal that equates to trading 3.5 Sterling shares for each Fusion share.

    A formal offer from Sterling is expected in the next few days, industry sources say. Fusion's shares fell 0.75p on Friday to 38.5p, while Sterling's slipped 0.25p to 11.25p.

    Fusion, which said it would only accept an offer "on the right day, at the right price," last week rejected an unsolicited all-share approach from Sterling as "significantly undervaluing" the company.

    Alan Stein, Fusion's managing director, expressed surprise at Westmount's move: "To do this without consultation or warning does seem very strange. Just when things started to get to the interesting bit, someone pulls the rug out under us. This is a very opportunistic time."

    He said Fusion's new exploration phase which involves drilling between six and 15 wells in the next two years could be a "potental company-maker". Fusion specialises in drilling oil in the deep-sea waters off west Africa, an attractive area in recent years.

    Fusion has a market capitalisation of about £39m ($64m) and Sterling, with main interests in the Gulf of Mexico - is valued at about £44m.

    Fusion, which reported a pre-tax profit for the first time last week - largely from the sale of some of its licences in Mauritania - said it had sufficient working capital for the next 18 to 24 months.

    Derek Williams, chairman of Westmount, said: "Our decision to sell follows mounting disappointment in the performance of our investment in Fusion since the flotation, and our strong belief in the merits of combining Sterling's strengths with Fusion's exploration portfolio."

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