Roc Defends Horizon Merger as Largest Shareholder Opposes Deal

Roc Oil Co. (ROC) defended a deal to combine with Australian explorer Horizon Oil Ltd. (HZN) to create a company valued at A$800 million ($742 million), saying most shareholders it has talked to are supportive.

Allan Gray Australia Pty, Roc’s largest investor with almost a fifth of the shares, opposes the merger, Simon Marais, Sydney-based managing director of the investment company, said today by phone. Allan Gray plans to call for a meeting to try to replace Roc’s directors if the company doesn’t allow its shareholders to vote on the proposal, Marais said. Only Horizon investors get to vote on the deal under the merger agreement.

“I haven’t heard any negative sentiment back from any of our other shareholders I’ve spoken to,” Alan Linn, chief executive officer of Sydney-based Roc, said today in a phone interview. “I’ve heard support at a number of different levels from various shareholders. They look at the transaction and can see the merits.”

Horizon and Roc agreed last week to merge operations stretching from China to Malaysia, saying a combined company would be in a better position to expand. Both boards offered unanimous support for the deal, according to the April 29 statement.

As larger oil and gas companies focus on shale investments in the U.S., it’s creating potential opportunities for a combined Roc and Horizon to acquire assets in Asia, Linn said. Roc’s current size limits its expansion options, he said.

Marais has found some people interested in becoming Roc directors, he said by phone.

“The deal is incredibly badly constructed from a Roc perspective,” Marais said. The Australian newspaper reported earlier today that Allan Gray opposed the merger. “Roc has not made the case. They can’t just say we want to do this because it makes us bigger.”

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Madelene Pearson

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