One merger taken off the table, another ongoing as South American firm outbids Touchstone for Trinity

Canada-based Touchstone Exploration’s acquisition of the UK’s Trinity Exploration and Production, which has a portfolio of onshore and offshore oil assets located solely in Trinidad and Tobago, has fallen through since the latter has accepted the cash offer from a third company, Trinidad-headquartered Lease Operators, a subsidiary of Well Services.

While Trinity’s shareholders initially accepted Touchstone’s merger deal in late June, Lease Operators’ cash offer from last week made the firm decide to go another way and take the cash offer, Trinity shared on August 2. As disclosed, Touchestone’s offer represented an implied value of 61.9 pence per Trinity share, which Lease Operators trumped by offering 68.05 pence per share.

Trinity’s directors consider Lease Operators’ offer superior as they feel it represents a material improvement for Trinity shareholders, accelerating the delivery of fair value to Trinity shareholders without further capital investment, time, or operational risk. 

“We believe that the Acquisition is a material improvement for Trinity Shareholders over the Touchstone offer and accelerates, without further capital investment, time or operational risk, the delivery of fair value to Trinity Shareholders,” explained Nick Clayton, Non-Executive Chairman of Trinity. 

Consequently, the UK firm’s board has withdrawn its recommendation of the Touchstone offer with immediate effect and intends to postpone indefinitely the court sanction hearing regarding the Touchstone offer, previously rescheduled to August 23, 2024. Furthermore, it intends to unanimously recommend that eligible Trinity shareholders vote in favor of Lease Operators’ offer.

The new acquisition is set to be implemented through a court-sanctioned scheme of arrangement between Trinity and the scheme shareholders after the UK player’s shareholders reach a decision on it at the court meeting and the general meeting. In order to become effective, both the scheme and the resolution must be approved by a 75% majority at both meetings. 

Chief Executive Officer (CEO) of Lease Operators, Charles Anthony Brash Jr, said: “We are pleased to make an offer for Trinity to purchase all the Scheme Shares in cash at a value of 68.05 pence per Scheme Share. We believe this Acquisition will benefit the Well Services Group of Companies and create more opportunities for the oilfield service sector.

“Both Lease Operators and Trinity will benefit from sharing knowledge and experiences learned, by increasing production throughout their oil fields. Our plans are to have a combined drilling programme between both companies to have a rig drilling on a continuous basis. We are also excited to acquire offshore acreage to give our offshore rigs and vessels more opportunities for continuous work.”

The acquisition is expected to become effective in Q4 2024, subject to the satisfaction or waiver of relevant terms and conditions, and to all terms and conditions of the acquisition which will be set out in the scheme document. An updated version of this document containing further details of the scheme and the acquisition and the notices of the meetings is scheduled to be published later this month.