Tangiers Petroleum executive chairman Eve Howell has defended her corporate strategy after shareholders marked down the company's share price 15 per cent in response to the friendly takeover bid for Jacka Resources.
Ms Howell said the $37 million scrip takeover would provide Tangiers with the portfolio diversification she had been aspiring to, but which would have taken years to achieve organically.
"This deal absolutely fits our strategy," Ms Howell said.
"We wanted to diversify our portfolio, we are in Morocco and we are trying to build an African-based business. This gets us there in one hit. It would have (otherwise) taken us years.
"We are excited about it and we see that putting these two com- panies together makes a significant small to mid-cap company."
Tangiers is offering 0.468 of its shares for every Jacka unit. The deal nominally valued Jacka at 11.2Â¢, based on Tangiers' 24Â¢ close on Friday before the company was placed in a trading halt pending news of the takeover.
Tangiers yesterday fell 3.5Â¢ to 20.5Â¢ as investors digested news of a deal that would deliver Jacka shareholders a 47 per cent stake in the enlarged group. Tangiers' share price fall cut the actual bid price to 9.6Â¢ per Jacka share.
Shares in Jacka, which has signed up Miro Advisors, soared 22 per cent to 8.8Â¢.
The takeover is expected to be completed by the middle of next year and will see Jacka chief executive Bob Cassie fill the same role in the enlarged Tangiers. Ms Howell will step back to become non-executive chairman.
Tangiers is lending cash-poor Jacka $2.5 million to tie it over in the short term. The merged group will have a mix of exploration and near-term development assets spread across Morocco, Tunisia, Nigeria, Tanzania and Somaliland
Tangiers' key high-impact well, Tarfaya off Morocco, is due to be drilled next year, as is Jacka's Hammamet West-3 sidetrack well off Tunisia. The exploration upside includes onshore prospects in Somaliland and Tanzania. Tangier and Jacka have a combined $8 million in available cash. The two are also anticipating $22.5 million from farm-in deals at Tarfaya and Odewayne (Somaliland).