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Roc Oil bids $554.5m for Anzon

Anzon Australia Ltd's board has advised its shareholders to take no action in relation to Roc Oil Company Ltd's $554.5 million cash and scrip takeover bid.

Anzon shares surged more than 16 per cent to an intra-day high of $1.52 before closing up 8.5 cents, or 6.51 per cent, at $1.39.

But Roc shareholders were less welcoming of the news, sending the company's stock 23 cents, or 11.39 per cent, lower to $1.79.

Roc is offering 0.792 shares plus five cents cash for each Anzon share.

This values Anzon at $1.65 per share or $612 million, based on Roc's closing price of $2.02 on Friday, and $1.46 per share or $554.5 million based on its price at the end of trading.

If the transaction proceeds, it will create a $964 million oil and gas producer with a geographically diverse portfolio.

The acquisition would add the Anzon-operated Basker-Manta-Gummy joint venture offshore Victoria in the Bass Strait to Roc's production base in Western Australia, China, Africa and the North Sea.

Anzon's largest shareholder, UK-based Anzon Energy Ltd, has also separately agreed to a merger with Roc via a scheme of arrangement.

Roc has offered 1.33 shares for every Anzon Energy share, valuing the target at about $303 million based on Roc's closing share price on Friday.

Anzon Energy is listed on London's Alternative Investment Market and holds a 52 per cent interest in Anzon.

Accordingly, the Anzon Australia bid is dependent on the Anzon Energy scheme.

Targeted again

This is the third occasion Anzon Australia has been the focus of merger activity in the past nine months.

Anzon initiated an auction of the company in September after a series of approaches from several parties, rumoured to include Santos Ltd, Origin Energy Ltd and Australian Worldwide Exploration Ltd.

The target settled on a merger with Perth-headquartered petroleum producer ARC Energy Ltd in October but Melbourne-headquartered Nexus Energy Ltd scuttled that plan by amassing a blocking stake in Anzon after being omitted from the auction process.

Anzon agreed to a $648 million merger with Nexus in January but the proposal was dropped in May when Nexus got cold feet following disappointing results from a drilling program at the Basker oil field.

Roc will have to convince Nexus, which holds about 19.24 per cent of Anzon's stock, of the merits of a tie-up.

If successful, Roc will gain Anzon's 12 per cent interest in Nexus.

Fat Prophets analyst Gavin Wendt said Roc's proposal seemed to be part of its strategy of diversifying its production base.

"And they would probably see an opportunity to pick up an undervalued asset that has had some technical issues," Mr Wendt said.

Unique and compelling

Roc chairman Andrew Love said in a statement that the proposed merger would benefit both shareholder groups, and was "unique and compelling".

The transaction requires Foreign Investment Review Board approval and is expected to be completed by September.

Roc, which is listed on London's Alternative Investment Market as well as the Australian stock exchange, is being advised by Gresham Advisory Partners Ltd while Anzon is being advised by Macquarie Capital Advisers, RFC Corporate Finance and Deacons.

Anzon operates the Basker-Manta joint venture, in which it has a 40 per cent interest. Other participants are Beach Petroleum Ltd and two Japanese firms, Itochu Corporation and Sojitz Corporation.