OT: Amerada swoops - 'Desperate' Hess to pay $3.2 billion for US indepedent Triton Energy
Upstream, July 13
Dan Rigden
Amerada Hess has agreed a $3.2 billion cash bid for fellow US independent Triton Energy, paying a full price to deliver a strategic shift from its mixed downstream past to a higher opportunity upstream-focused future.
The companies have entered into a definitive agreement under which Amerada will pay $45 per share and assume $500 million in Triton debt, a premium of 50% to the closing price of Triton shares before the announcement.
Triton's shares climbed on news of the deal but the market was cool on the implications for Amerada and its shares fell 2.5% to $77.35.
It was the type of deal Amerada has wanted to do for a long time and after failing to acquire Lasmo and taking a serious look at Lundin, analysts said the price reflected a certain "desperation".
In terms of reserves and production acquired, the Triton deal is far more than Amerada was prepared to pay for Lasmo. In broad terms it is paying three-quarters of its bid for Lasmo to get around half the production and half of the reserves. One analyst said: "They have thrown the kitchen sink at it this time."
Buying Triton adds some 570 million barrels of oil equivalent reserves on a proved and probable basis, according to Amerada's mid-2001 assessment of Triton. This means a cost per barrel of some $5.66. On a proved basis, Amerada is paying $9.20 per barrel.
The deal goes a long way to delivering Amerada's stated desire to shift the company to a position where three quarters of capital employed is in exploration and production.
It is also a big bet on some 600 million barrels of future exploration potential Triton has identified offshore Equatorial Guinea.
Amerada chairman and chief executive John Hess said: "That's where the real growth potential of this company is and where the real excitement is."
He explained that buying Triton will increase Amerada's production from 425,000 barrels of oil equivalent per day to about 535,000 boepd in 2002 and more than 600,000 boepd in 2003.
"The acquisition of Triton strengthens our exploration and production business, gives us access to long-life international reserves, substantially increases our production growth and provides significant exploration potential," said Hess.
"It improves our competitive position in a consolidating industry while being accretive to our estimates of earnings and cash flow per share for 2002."
The transaction has been approved unanimously by the boards of both companies and Triton is recommending that its shareholders accept the offer.
Amerada has received an irrevocable commitment from Hicks, Muse, Tate & Furst Incorporated, which was a prime mover in bringing the two sides together, to sell its 38% stake in Triton.
HMTF has tripled its money in Triton in three years. The deal is expected to close in the third quarter.
The company will fund the takeover from existing cash resources and credit.
Goldman Sachs served as financial adviser to Amerada and JP Morgan Chase Securities advised Triton. |
