Capricorn merger scrapped after shareholder revolt

Edinburgh-based oil and gas firm Capricorn Energy on Wednesday terminated its planned merger with Israeli gas group NewMed Energy after months of shareholder pressure that also toppled Capricorn’s executive leadership.

Activist shareholder Palliser Capital and some of Capricorn’s biggest shareholders had publicly opposed the merger, arguing that it undervalued Capricorn.

Proxy advisers also recommended rejecting the plan.

Capricorn was formerly known as Cairn Energy.

In early February, almost the entire Capricorn board including its chief executive were replaced by new directors proposed by Palliser.

 confirmed six new board members, with Craig van der Laan appointed the firm’s new chair and Chris Cox appointed interim chief executive officer.

The new directors announced a strategic review of the company.

Capricorn said in a stock exchange statement on Wednesday: “Based on its work to date in respect of the strategic review and taking into consideration the views expressed by shareholders on the NewMed transaction, the board has resolved to advise shareholders to vote against the NewMed transaction.

“As a consequence of this decision, the company and NewMed have mutually agreed that the business combination agreement entered into between the company and NewMed on 29 September 2022 be terminated with immediate effect.

“The board believes this action is necessary to enable the consideration of all potential strategic options for the company, including the material return of capital to shareholders and potential engagement with respect to alternative options.”

NewMed said: “Further to NewMed Energy – Limited Partnership’s press release of January 15, 2023, with respect to a business combination transaction with Capricorn Energy PLC, NewMed notes that, following the recent developments at Capricorn, including the fundamental change in the composition of Capricorn’s board and senior management, that NewMed and Capricorn have mutually agreed to terminate the transaction with immediate effect.”