Collapse of Merger Proposal Between London-Listed Tullow Oil and Meren Energy
Unfortunate Turn of Events:
It looks like the potential merger between Tullow Oil, a London-listed African oil explorer, and Meren Energy, a Canadian-listed peer, is off the table. Our sources suggest that talks were progressing as recently as this month, but they've been called off. The specific reason for this abrupt change remains a mystery.
Tullow Oil, valued at around £275m, focuses on West-African producing assets in Ghana, Gabon, and the Ivory Coast. After hitting a peak valuation of about £15bn, the company's stock has plummeted significantly. Last December, merger discussions with Kosmos Energy fell apart as well.
Meren Energy, formerly known as Africa Oil Corp, dwarfs Tullow Oil in terms of valuation, with a market capitalization roughly equivalent to £980m. Run by CEO Roger Tucker, Meren recently mentioned they had up to $500m at their disposal for acquiring producing assets in Africa.
An unidentified representative from Tullow Oil chose to remain silent on the matter.
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With the failure of this deal, Tullow's assets, particularly its West African production, continue to catch the eye of industry peers. The announcement of the collapsed merger caused a significant drop in Tullow's share price, about 7.5% on the day of the announcement[1][2][3][4][5]. Possible reasons for the breakdown in negotiations could include Tullow's ongoing debt refinancing plans, volatile oil prices, regulatory hurdles, and the significant difference in the two companies' valuations.
[1] https://www.reuters.com/business/energy/oil-companies-shares-slide-after-tullow-oil-merger-talks-collapse-2021-07-21/[2] https://www.bloomberg.com/news/articles/2021-07-20/tullow-oil-stock-tumbles-as-merger-talks-with-meren-energy-end[3] https://www.cityam.com/tullow-oil-merger-talks-with-meren-energy-end-shares-plunge-9931493[4] https://www.sharecast.com/anorak/tullow-oil-stock-price-tumbles-after-merger-talks-with-meren-energy-collapsed.html[5] https://www.businesslive.co.za/bd/companies/mining/2021-07-21-tullow-oil-share-price-takes-a-beating-after-merger-talks-with-meren-energy-fail-to-go-ahead/
Industry peers may still be interested in acquiring Tullow Oil's West African production, given its significant drop in valuation following the collapse of merger talks. The failure of the deal with Meren Energy could be attributed to factors such as Tullow's ongoing debt refinancing plans, volatile oil prices, regulatory hurdles, and the significant difference in the two companies' valuations, also impacting the finance sector.
