Capricorn Energy directors quit en masse: Victory for activist investor as seven quit in battle against Israeli merger plan
The directors of Capricorn Energy all resigned yesterday in a victory for an activist shareholder.
Seven board members, including chief executive Simon Thomson and chairwoman Nicoletta Giadrossi, have agreed to leave the oil and gas group.
Both will leave the board immediately alongside three other directors Peter Kallos, Alison Wood, Luis Araujo.
Purged: Seven Capricorn board members, including chief executive Simon Thomson and chairwoman Nicoletta Giadrossi (pictured), have agreed to step down from the oil and gas group
Chief Financial Officer James Smith will step down at a later date alongside non-executive director Keith Lough.
The exodus follows weeks of pressure on Capricorn management over controversial merger plans with Israeli rival NewMed Energy.
Palliser Capital, the company’s third-largest investor with a stake of about 6.9%, led a campaign to scrap the plan and called for a vote to remove seven directors.
The activist wanted to replace the leaders of Capricorn with his own candidates, among them Chris Cox, the former director of Spirit Energy, and Hesham Mekawi, who previously worked as the head of BP’s North African operations.
The effort to stop the merger was backed by several other shareholders and advisory firms, with Glass Lewis and ISS recommending that investors oppose the deal.
A vote on the deal was due to take place on Feb. 1, with Capricorn shareholders set to decide whether to replace directors in a separate ballot later that day.
But the company announced that the vote on the merger had been pushed back to February 22.
The vote on the composition of the board of directors will still take place, because Palliser has proposed six candidates to become directors, including Cox and Mekawi.
Capricorn said delaying the merger vote would allow the new board to “evaluate NewMed’s proposed combination alongside other strategic options” before deciding the company’s next move.
Analysts at brokerage Stifel said the cleanup of the boardroom showed Palliser had “won the argument with shareholders.”
They added that the shake-up could allow Capricorn to “re-enter merger talks with NewMed” in the near future from a “position of strength”.
The company’s shares rose 0.2%, or 0.4p, to 244.8p.
Capricorn is one of the largest gas-focused energy companies listed in London, with a portfolio spanning operations in the North Sea as well as projects in Egypt, Mexico, Suriname and Mauritania.
Last September, the group announced plans to merge with NewMed in a deal that would have paid shareholders a special cash dividend of £503million.
The merger valued Capricorn at £274m, or 271p per share and a 13% premium to its share price the day before the deal was announced.
But the plans faced stiff opposition from several major shareholders, who argued the tie-up undervalued the company.
Following Palliser’s opposition, Capricorn’s largest investor, New York-based Madison Avenue Partners, backed the effort to oust the board and vote against the merger.
And earlier this month, Legal & General Investment Management (LGIM) took the rare step of backing the opposition based on what it said were serious concerns about the NewMed deal.
LGIM added that the company’s decision to hold the merger vote ahead of the director replacement ballot appeared to be an attempt to “undermine due process” and had raised “serious questions about fitness and fitness.” of the whole council”.
Other major investors who have publicly opposed the NewMed merger include London-based investment manager Kite Lake Capital, which owns 7.4% of the company, and Newtyn Management, which owns slightly more. by 6%.
Together, the five major opposition shareholders own more than 32% of Capricorn, providing an important bulwark against the deal that may have destroyed its chances of success.