By Jeffrey Jones
CALGARY, Aug 27 (Reuter) - A potential merger of Lundin
family-controlled International Petroleum Corp and
Sands Petroleum AB could be a precurser to a
takeover attempt for Arakis Energy Corp , industry
sources said on Wednesday.
"I see (the Sands-IPC merger) being step one and step two
will be some sort of an offer to Arakis to merge," Oppenheimer
& Co analyst Paul Hayes said in a telephone interview.
Stockholm-based Sands and IPC of Vancouver, both engaged in
international oil exploration and production, revealed on
Wednesday they were in merger talks. The companies said they
engaged financial advisers but were giving no guarantees a deal
would be reached.
IPC has a market capitalization of about C$288 million,
while Sands' current market value is about C$338 million.
IPC director Lukas Lundin told Reuters he was unable to
comment on the merger talks until more information was made
public, likely on Monday.
Sands bought an 8.2 percent stake in Arakis in March, a
move that fueled rumors that Arakis -- whose stock performance
has been lackluster despite the signing of a major deal this
year -- would soon be a takeover target for the Lundins.
Relations between the Lundins and Arakis's management led
by Chairman Lutfur Khan have often been strained since then.
A Sands-nominated director was appointed to Arakis's board
at the company's annual meeting in late July. The group had
earlier pushed for two nominees, a request denied by Khan.
Sands also recently called for Arakis to install a new
president better known in world oil circles and on Wall St.
At the annual meeting, the Lundin group was frustrated in its
attempt to defeat a new shareholder rights plan after
documentation was filed late making voting impossible.
IPC President Ian Lundin said at the time, however, that
Arakis's election of a new board, which now includes more
directors not seen as close Khan allies, was a positive step.
Earlier this year, Sands was said to have floated the
concept of a stock-swap offer for Arakis past the company's
other large shareholders, such as Boston-based State Street
Research. The idea was shot down, however.
Hayes said a Sands-IPC merger would strengthen the value of
stock that could be used in a share-swap offer for Arakis.
"It brings more assets to bear in IPC...maybe they are
trying to simplify things for investors," he said.
IPC made headlines earlier this year when it signed a deal
to explore for oil on a major southern Sudan concession
adjacent to the one being developed by an international
consortium assembled by Arakis.
IPC's 5A concession in the civil-strife-torn African
nation, however, is far less developed than the Arakis acreage,
estimated to harbor reserves of as much as 3.5 billion barrels.
Arakis spokeswoman Kristine Dow said on Wednesday that
relations between her company and the Lundins had recently
improved and she had heard no talk of a takeover being the
impetus beind the IPC-Sands talks.
"That may be the case but we don't have any indication of
anything from them in that regard. We've been operating with
them very cooperatively to assist them in their concession to
the south of us," she said.
IPC shares on the Toronto Stock Exchange, halted earlier on
Wednesday for the announcement, closed up 0.55 to 6.40. Its
Nasdaq-listed shares were up 3/8 to 4-5/8. Arakis stock on
Nasdaq was unchanged at 3-1/32.
((Reuters Calgary Bureau (403) 531-1624)) |
