The Takeovers Panel has declined to initiate proceedings regarding Horizon Oil's off-market takeover bid for Cue Energy, finding no reasonable prospect of declaring unacceptable circumstances. This follows an application by Cue, which centered on a pre-bid agreement where Horizon agreed to purchase a 19.99% stake in Cue from its major shareholder, Echelon Resources.

Panel's Findings and Rationale

The panel determined that Echelon's disclosure of its directors' potential conflict of interest was consistent with guidance and timing did not create unacceptable circumstances. It found no evidence that this conflict influenced Cue's decision-making after the bid was announced, noting Cue formed an Independent Board Committee (IBC) the same day. Furthermore, the panel concluded there was insufficient material to infer an association between Echelon and Horizon, and that alleged contraventions in consultancy agreements would not lead to unacceptable circumstances.

Shareholder Actions and Company Responses

Echelon, which initially intended to accept Horizon's offer for its remaining shares, withdrew that intention in April. However, following the panel's decision, Echelon accepted the offer. Its CEO stated the panel's ruling aligned with its view that its approach was appropriate and that the acceptance supports portfolio management and an orderly transition of Cue to Horizon's control. Conversely, Cue's IBC has reaffirmed its advice to shareholders to reject Horizon's offer, citing that Horizon is not a party to the Palm Valley joint venture, which recently approved new wells expected to boost Cue's production and cash flow.

Offer Details and Corporate Context

Horizon's bid, launched in March, values Cue at A$0.143 per share via a mix of cash and Horizon shares, and is scheduled to close on 5 June. Both companies are exploration and production operators in the Asia-Pacific region and are joint venture partners with Echelon in the Mereenie field in Australia.