Alfa SAB, already the largest shareholder in Pacific Rubiales Energy Corp., joined Harbour Energy Ltd. in a takeover offer of about C$2.1 billion ($1.7 billion) for the Colombian company to expand into the oil industry.
Pacific Rubiales said exclusive talks are under way with Mexico’s Alfa and energy-investment firm Harbour. The C$6.50 a share bid is 18 percent more than Tuesday’s closing price in Toronto. The stock jumped 12 percent to C$6.16 on Wednesday. after surging 18 percent Tuesday when people familiar with the deal told Bloomberg News that Alfa and Harbour had made a bid.
The Pacific Rubiales board supports the offer and is “working on turning it into something binding” as quickly as possible, General Counsel Peter Volk said in a telephone interview Wednesday. A group of Venezuelan investors that owns more than 11 percent opposes the bid, said Orlando Alvarado, who represents O’Hara Administration Co. and three affiliates.
In pursuing Latin America’s largest non-state producer, Alfa moved closer to realizing its goal of becoming an oil company after Mexico agreed to open fields to private drillers for the first time since 1938. The Mexican manufacturer built its stake last year to almost 19 percent, short of the 20 percent that in most cases would spur a bid under Canadian law.
For Alfa, “in the short term this could generate some uncertainty because of the debt that Pacific Rubiales has and because of low oil prices,” Fernando Bolanos, an analyst at Monex Casa de Bolsa, said in an interview. “It’s somewhat positive in the mid to long term especially once oil prices rise and Pacific Rubiales’s debt can be restructured.”
Alfa shares fell 2.3 percent to 32.73 pesos in Mexico City after gaining as much as 2.8 percent.
Pacific Rubiales said in a statement that an independent financial adviser was hired to value the company, while Alfa and Harbour Energy have completed technical, financial and legal due diligence.
The Alfa-Harbour offer is 73 percent below Pacific Rubiales’s 2014 high, which was set before crude prices began to tumble. The global rout in oil markets also called into question the plans for Alfa, which was seeking to add energy assets to a portfolio that already includes petrochemicals, lunch meat and auto parts.
Alfa Chairman Armando Garza told reporters April 15 that the company hadn’t resolved whether to stand pat with its Pacific Rubiales stock, buy more or sell the stake, saying a decision “isn’t easy to make.” A day later, in an interview at Alfa’s headquarters in San Pedro Garza Garcia, he said Pacific was on the right path to fix its business.
Harbour was formed by Asian commodity trader Noble Group Ltd. and private-equity firm EIG Global Energy Partners LLC, to invest in assets energy worldwide.
Pacific Rubiales has debt of about $4.7 billion, which has ballooned following acquisitions of smaller oil companies as it faces the end of a contract to operate the namesake Rubiales field.
A group of at least five Venezuelan businessmen have built an 10.3 percent stake in the company in the last two months, becoming the third largest investor in Pacific Rubiales, said the group’s representative Alvarado. The group declared an additional 0.84 percent stake Wednesday and is looking to continue buying stock, he said by telephone Wednesday.
The Venezuelan group won’t sell to Alfa, said Alvarado, a former ABN AMRO Bank NV investment banker and chief financial officer of Caracas-based engineering company Derwick Associates. “We see ourselves as long-term investors and we’re getting traction.”