• Deal unfair to MPI minority shareholders, Lux-Investment says
  • Move follows Cape Town fund Allan Gray's criticism last week

Minority shareholders of MPI are closing ranks in a bid to block the French oil explorer’s proposed acquisition by Etablissements Maurel & Prom SA.

The deal undervalues MPI, Lux-Investment Professionals SICAV-FIS SA, which owns 0.9 percent of the company, wrote in a letter to the board of directors. That follows criticism of the proposed deal last week by Cape Town-based Allan Gray, one of African’s biggest funds and holder of a 5.9 percent stake.

Maurel’s offer of 2.09 euros per MPI share is “grossly unfair to minority shareholders,” Jan Vantomme and Bruno Toye, directors at Lux-Investment, said in their Oct. 12 letter seen by Bloomberg. The “absolute minimum” value for MPI taking into account its cash holdings and a stake in Nigerian oil company Seplat Petroleum Development Co. must be 3.26 euros, Vantomme said separately by phone Tuesday from Oudenaarde, Belgium.

Maurel, which explores for oil across 12 countries including Colombia and Myanmar, said in August it wanted to merge with MPI to lower costs and taxes. MPI’s shares fell 3.4 percent to 2.58 euros at 4:31 p.m. in Paris, valuing the company at 298 million euros. The stock is up 11 percent since Aug. 26, the day before the merger was announced. Maurel has a market capitalization of 496 million euros.

“The independent directors should consider all other alternatives to the proposed transaction,” Vantomme and Toye said in the letter. ”Several options exist that will create shareholder value,” including a stock buyback or increasing the stake in Seplat, they said.

Allan Gray estimates MPI’s cash at 2 euros a share and the 21.9 percent Seplat stake at 1.21 euros a share. The final merger ratio is set to be announced on Oct. 15, with the deal completed on Dec. 11.

“I’m pretty optimistic” about blocking the merger, Andrew Lapping, a money manager at Allan Gray’s Africa Equity Fund, said by phone on Oct. 8. ”I just need a few people on my side. If we can get a couple more percent, I think we’ll be successful.”

Jean-Francois Henin, who owns 24.9 percent of MPI and 23.7 percent of Maurel and is chairman of both businesses, “is not available today to comment,” Marc de Rodellec, Maurel’s deputy chief financial officer, said in an email Tuesday. “We are very careful in respecting all the different stages to keep this transaction very clean for shareholders of both companies.’

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