Pacific Rubiales Posts Record Drop as Takeover Bid Quashed

Pacific Rubiales Energy Corp said on Wednesday that Mexican industrial conglomerate Alfa SAB de CV and energy investment firm Harbour Energy Ltd have dropped their plans to buy the Canadian oil and gas company.

Mexico’s Alfa (ALFFF) and private equity-backed Harbor Energy have withdrawn a $6.4 billion bid for Colombia-focused oil and gas producer Pacific Rubiales Energy (PEGFF), stating the bid would have been rejected by the target’s shareholders.

“The early proxy returns suggested that a significant number of shares would be voted against our proposal, ” Harbour chief executive Linda Cook said adding that the offer had been full and final.

The maker of lunch meat and auto parts fell 10 per cent since being identified as a bidder in May, a sign of investor dismay even as Pacific Rubiales stakeholder O’Hara Administration Co slammed the C$6.50-a-share bid as too low. “Accordingly, the special meeting of shareholders scheduled for July 28, 2015, which had been called in order for shareholders to consider the arrangement has been canceled”, Pacific Rubiales said.

Pacific’s biggest investor, O’Hara Administration Co. wants to retain its stake, on the assumption that the company will be worth more in three years after board and management changes, spokesman Orlando Alvarado said Sunday. The deal that was being done by way of a plan of arrangement required support from two-thirds of the shareholders who voted.

The market reaction on Alfa’s own bond curve was modest, as the company was not planning to consolidate Pacific Rubiales into its balance sheet, said the trader. The deal’s breakdown also raises concern that Alfa, which holds just under a 19 percent stake, may no longer want to partner with Pacific to drill in Mexico, Dudlyke wrote.

The company pledged to continue with its plans to reduce operating costs, divest non-core assets, reduce debt, and continue to pursue energy opportunities in Mexico with its preferred joint venture partner, ALFA.