Norton Rose Fulbright’s Sydney office is acting for Magnum Hunter Resources Corporation (Magnum Hunter) on its hostile competitive off-market takeover offer, via a wholly-owned subsidiary, for all of the ordinary shares in Ambassador Oil and Gas Limited (Ambassador). The consideration under the offer is Magnum Hunter stock.

Magnum Hunter is a US incorporated independent oil and natural gas company engaged in the exploration for and the exploitation, acquisition, development and production of crude oil, natural gas and natural gas liquids resources in the United States. Magnum Hunter is also engaged in midstream and offield services operations, primarily in West Virginia and Ohio. Its common stock is listed for trading on the New York Stock Exchange (NYSE) and as at the close of trading on 9 June 2014 had a market capitalisation of approximately US$1.75 billion.

The proposal is unique in that it offers NYSE listed shares as consideration, and was made in circumstances where, at the time of announcement of Magnum Hunter’s intention to make the offer:

  * there was already an agreed recommended offer for Ambassador by Drillsearch Energy Limited (Drillsearch) in the market;
  * Drillsearch had entered into agreements to acquire 19.9% of Ambassador; and
  * Drillsearch had received statements of support in respect of a further 25% of Ambassador shares (in the absence of a superior offer/proposal).

Norton Rose Fulbright partner Shaun Clyne said that the transaction is a further example of an offshore bidder being prepared to enter the Australian market using its own foreign scrip to acquire an ASX listed entity.

“This method of acquisition is becoming increasingly favoured in circumstances where Australian shareholders are looking to gain exposure  to offshore assets,” he said.

The Magnum Hunter proposal provides Ambassador shareholders with ongoing exposure to Magnum Hunter’s unconventional shale resource plays in the United States.

Shaun noted, “We expect to see this trend continue and as a global law firm we are ideally placed to advise incoming acquirers on these transactions.”