Serica Energy PLC (AIM:SQZ) confirmed it has rejected the merger proposal made by Kistos PLC (AIM:KIST), dismissing it as undervaluing Serica and increasing risk to its balance sheet.
It comes after Kistos yesterday revealed it had rejected a merger proposal made by Serica.
The Serica offer would have given Serica shareholders around 72% of the enlarged company, whilst Kistos’ alternative offer would see each set of shareholders represent 50% of the new group.
Serica today said the Kistos proposal would be dependent upon new debt, would see net cash reduce by £700mln, and the enlarged company would have a diminished financial capacity for organic investment and further acquisitions.
In the statement, the company said: “Serica pro-actively seeks opportunities to utilise its strong balance sheet and operating capability to diversify its production portfolio and increase the scope for organic investments.”
It added: “The Serica board strongly believes the Kistos possible offer materially undervalues Serica and would negatively impact the combined entity's balance sheet and growth potential.”