Upheaval shakes up Touchstone’s merger plan as third player makes offer for UK-based oil & gas firm

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 hit a snag as a third company, Trinidad-headquartered Lease Operators, a subsidiary of Well Services, has made a cash offer for the latter.

After Touchstone announced its intention to acquire Trinity in May, and the shareholders voted in favor of the deal in late June, another company, Lease Operators, made a cash offer for Trinity, the UK firm shared on July 24. The offer in what appears to be an unexpected turn of events amounted to around £26.5 million, or $34.05 million.

However, Trinity underlined that the announcement does not constitute a firm intention by Lease Operators to make an offer for the company, which is not guaranteed even if the preconditions are satisfied or waived. 

The Lease Operators’ proposal states that the offer is conditional upon, among other things, the completion of satisfactory confirmatory due diligence on Trinity by Lease Operators and a unanimous recommendation from the board. According to the Trinidadian firm, the precondition relating to its recommendation is not waivable but the precondition concerning due diligence is.

Touchstone noted that the possible offer is a “conditional, non-binding, indicative proposal” and subject to the completion of “satisfactory confirmatory due diligence,” expecting any firm offer announced by Lease Operators to be subject to certain regulatory approvals in the Republic of Trinidad and Tobago, in the same way as the acquisition scheme.

In light of the new development, Trinity’s board decided to reschedule the court hearing relating to the acquisition, originally scheduled for July 31, to August 23. The hearing was one of the preconditions for the transaction to close, as stated in the scheme document.

Touchstone said that conditions relating to the approval by Trinity shareholders at the general meeting and court meeting on June 24, 2024, and all regulatory and antitrust conditions have been satisfied. Unless the Trinity board takes action, and subject to the court’s approval of the scheme at the court hearing, the scheme would have become effective as expected on August 1.

As highlighted by Trinity, on the date preceding the rescheduled court hearing date, Touchstone will have the option of invoking a condition referring to the hearing being held on or before the 22nd day after the expected date set out in the scheme document.