The shares of AIM-listed Mediterranean Oil & Gas (LSE: MOG) surged 16% higher to 6.55p this morning, after investor-favourite Rockhopper (LSE: RKH) unveiled a cash-and-shares offer for the company.
As its name suggests, Mediterranean is an explorer and producer of oil and natural gas in central Mediterranean regions — and boasts major projects in Italy, Malta and France
Over the past year, the Mediterranean has struggled with regulatory delays and setbacks at its most promising assets, and Rockhopper is using the opportunity to bolster its portfolio. The deal values Mediterranean at £29.3m, a price tag that the company traded for in the market as recently as September.
At its peak valuation in 2006, Mediterranean was rated at more than £80m by investors, or 244p per share.
Rockhopper’s shares were broadly unchanged at 95p following the announcement.
Reactions to the news were varied. Analysts at Westhouse Securities described the deal as “sensible”, adding:
“It is a small acquisition, but is cheap and gives [Rockhopper] exposure to an increasingly interesting and prospective province.”
On an online forum, one Mediterranean shareholder commented:
“It is undoubtedly the right thing to do. Look at the presentation from the AGM. There were two catalysts this year, we still get paid out on one of them. They were no longer covering their costs with cash-flow, and they were subscale with no chance of raising further capital…”
Meanwhile a contributor to a Rockhopper bulletin board remarked:
“Even more to the point, with a rig due in the Falklands early next year, why have RKH bought this junk in Malta?”
It seems the jury is still out on which party is likely getting the best deal.
