Beach Energy more than doubled its stake in Adelaide Energy on Monday as acceptances were received for its $94 million takeover offer.
A white knight bid for Adelaide Energy looks unlikely after its hostile suitor, Beach Energy, made strong headway in its $94 million takeover offer.
Oil and gas producer Beach Energy early on Monday offered 20 cents a share for its smaller peer - sending Adelaide Energy's shares soaring by 43 per cent to match the bid price.
However, the target said it was looking for alternative deals.
Beach, Adelaide Energy's largest shareholder, started Monday with a stake of 19.95 per cent and ended with a 44.23 per cent interest.
Adelaide Energy has advised its shareholders to take no action while it evaluates other available options.
Its second biggest shareholder, Auckland Trust Company Ltd, has already sold into the offer.
"Beach is greatly encouraged to see the support for the offer to date," Beach managing director Reg Nelson said.
"We believe that with a relevant interest of 44.23 per cent, it is unlikely that any counter offer will now be made for the company."
Adelaide Energy says its directors will not accept the bid with respect of their personal shareholdings.
"The directors of ADE (Adelaide Energy) have determined not to accept the takeover offer with respect to their shareholdings," Adelaide Energy said in a statement.
"The company has commenced an investigation of realistic alternatives with a view to recognising the strategic value of ADE's assets and maximising the final outcome for shareholders."
Mr Nelson said the bid was a logical next step for company, a much larger oil and gas producer with a market capitalisation of more than $1.3 billion.
Mr Nelson said Beach's proposal would remove ongoing funding-related concerns for Adelaide Energy's Nappamerri Trough unconventional gas work program in the Cooper Eromanga Basin straddling the South Australian/Queensland border.
"It will consolidate Beach's landholding in the heart of the Cooper Basin where we are focusing our efforts on what is a significant shale- and basin-centred gas play," Mr Nelson said in a separate statement on Monday.
The on-market offer, to be funded from Beach's cash reserves, is due to close on December 22.
Beach also on Monday reported its fifth new oil discovery in the Western Flank Oil Fairway in the Cooper Basin at the Basham-1 well.
Beach shares closed up 2.5 cents, or 2.08 per cent, at $1.225.
Almost 127 million Adelaide Energy shares changed hands on Monday, making it the most traded stock by volume.
ADE Price at posting:
20.0¢ Sentiment: Sell Disclosure: Not Held
