Is a low offer in hand worth more than the lure of a better one — or two — in the bush?
For investors in Trinidad Drilling Ltd., that’s one of the tantalizing questions to consider as they mull a hostile $947-million takeover bid by suitor Ensign Energy Services Inc.
Ensign’s all-cash offer of $1.68 a share was launched last month, just days after Trinidad wrapped up a strategic review process that didn’t find any buyers or secure any deals.
On Thursday, Trinidad’s board recommended shareholders reject the bid, saying it significantly undervalues the company.
The Calgary-based driller is now searching for a white knight to arrive and says it has a number of participants involved in a reopened data room.
“Some of them have been in before, some of them are new. We do expect somebody to come forward with another offer that hopefully represents better value for the shareholders,” Trinidad CEO Brent Conway said in an interview Thursday.
“There is really no panic to tender to an Ensign offer.”
The unsolicited bid expires on Dec. 14. Trinidad’s stock closed Friday at $1.79 on the Toronto Stock Exchange.
The battle comes as the drilling sector in Canada has been punished by lower commodity prices in recent years and weak prices for their services.
If a superior offer doesn’t arrive, Trinidad is worth more as an independent firm and can continue as a stand-alone entity, Conway stressed. Its drilling business in the United States, where it has a foothold in the Permian Basin, is busy, while the company is seeing more activity in Canada this year.
But Trinidad’s share price has been pummelled since the oil price downturn and its takeover of CanElson Drilling Inc. in June 2015.
Trinidad initiated a strategic review in February that ended July 31. Its share price sank to $1.36 just one week later, while Ensign …read more
Source:: Calgary Herald