(Bloomberg) -- Israel’s NewMed Energy LP said its proposed merger with Capricorn Energy Plc is now less likely to proceed after the UK company ditched a slew of board members and postponed a meeting to approve the deal.
“The probability for the closing of the transaction has significantly decreased,” NewMed said Tuesday, adding that it “did not give any consent to the decisions reported by Capricorn.”
The resignations — including the oil firm’s chair and chief executive officer — follow a campaign by activist investor Palliser Capital to shake up the board and block the NewMed deal. Palliser has said the proposed tie-up undervalues Capricorn’s assets and criticized the company for scheduling a shareholder vote on the transaction around the same time as a meeting to rejig the board.
Caving to pressure, Capricorn said Tuesday that while a general meeting will go ahead as planned on Feb. 1, the vote on the merger will be pushed to Feb. 22, “allowing a reconstituted board to assess the proposed NewMed combination alongside other strategic options.”
Capricorn Chair Nicoletta Giadrossi and CEO Simon Thomson will step down from the board immediately, together with three other directors, the company said in a statement. Chief Financial Officer James Smith will do so at a later date.
London-based Palliser, one of Capricorn’s largest shareholders, has outlined a plan to unlock the value of its assets. Its crusade has gained steam over the past week as several prominent shareholder advisory firms recommended investors vote against the merger and back Palliser’s proposed board-change resolutions. Palliser is seeking to appoint six independent director candidates.
Earlier this month, Capricorn issued a lengthy rebuttal defending its proposed NewMed deal, saying the combination would provide at least $120 million more of a short-term return than on a standalone basis.
The company turned to the merger after dropping a highly criticized tie-up with Tullow Oil Plc in September last year.
(Updates with board members stepping down in fifth paragraph.)
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