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Petro Andina directors oppose $400M takeover bid

Last Updated: Friday, July 3, 2009 | 4:47 PM ET

CBC News

Petro Andina Resources Inc.'s board of directors is urging shareholders to reject an unsolicited $400-million takeover bid from a private Dutch company.

The Calgary-based company issued a statement Friday saying the offer from a wholly owned subsidiary of Pluspetrol Resources Corp. is "inadequate from a financial point of view."

3-month TSX chart for Petro Andina Resources3-month TSX chart for Petro Andina Resources Petro Andina shares soared after the offer of $8.10 cash per share was announced in mid-June. After Friday's statement, the shares ended the day down 13 cents to $9.07 on the Toronto Stock Exchange.

"This is an inadequate and opportunistic offer that fails to recognize the full value of Petro Andina," company president Wayne Foo said.

The board urged shareholders not to tender their stock to the offer, which it described as highly conditional and not firm. It says the company is trying to maximize shareholder value and that better offers may emerge.

Petro Andina's assets are mainly heavy oil production and reserves in the Neuquen Basin of Argentina and exploration acreage in Colombia and Trinidad and Tobago.

Pluspetrol and its subsidiaries are mainly focused on exploration and production of oil and gas in Latin America. The company has interests in Argentina, Bolivia, Venezuela, Colombia, and Chile.

"The sum of the net present value of future net revenue from Petro Andina's proved plus probable oil and natural gas reserves in Argentina and Petro Andina's net working capital significantly exceeds the value of the Pluspetrol offer," even before taking into account the value of its possible reserves in Argentina, its other interests in South America and Trinidad and Tobago and potential synergies between the two companies, Petro Andina said.

The company said the board, in consultation with its financial advisers, "has commenced an evaluation of various initiatives in the best interests of Petro Andina and its shareholders with the objective of maximizing value for shareholders."

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