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Fosun to buy Roc Oil for $441 mn to end Horizon merger

JAMES PATON

SYDNEY, Australia (Bloomberg) -- Billionaire Guo Guangchang’s Fosun International Ltd. agreed to acquire Roc Oil Co. for A$474 million ($441 million) in cash, giving the Chinese group assets stretching from Australia to Malaysia.

Shanghai-based Fosun is offering 69 cents a share, 10% more than Roc’s last closing price, the Sydney-based company said on August 4 in a statement. The bid depends on Roc ending plans to combine with rival Horizon Oil Ltd. Roc rose 6.8% to 67.25 cents in Sydney.

Guo’s Fosun, the investment arm of China’s biggest closely held industrial group, has been on a buying spree, ranging from insurance businesses to New York City office buildings. Roc, owner of stakes in projects backed by PetroChina Co. and Cnooc Ltd., had received two approaches from potential buyers it didn’t name since stating the Horizon merger in April.

“Considering the choices available to us, this is a much, much better outcome and significantly closer to a fair price,” said Simon Mawhinney, a portfolio manager in Sydney at Allan Gray Australia Pty, Roc’s biggest shareholder.

Horizon shares fell 6.1% to 34.75 cents in Sydney trading. The benchmark S&P/ASX 200 Index declined 0.3%.

Superior Option

“The board has unanimously concluded that the offer is a superior option” to the planned A$800 million Horizon merger, Roc Chairman Mike Harding said in the statement.

Horizon expects Roc to end the merger agreement, according to a separate statement. Horizon has strong prospects in Papua New Guinea, its balance sheet is in “very sound shape,” and it had cash reserves of about $100 million at the end of June, according to the company.

Allan Gray, which had opposed the Horizon proposal and fought unsuccessfully for Roc shareholders to get a vote on that deal, supports the Fosun bid, unless there’s a higher offer, Mawhinney said on August 4 in a phone interview.

The bid is 52% more than Roc’s closing price of 45.5 cents on April 23, before the Horizon deal was stated.

08/04/2014

 

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