PRESS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF
THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT IS BEING MADE UNDER RULE 2.4 OF THE CITY
CODE ON TAKEOVERS AND MERGERS (THE "TAKEOVER
CODE"). IT DOES NOT REPRESENT A FIRM INTENTION TO MAKE
AN OFFER UNDER RULE 2.7 OF THE TAKEOVER CODE. ACCORDINGLY,
THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL ULTIMATELY BE
MADE, EVEN IF THE PRE-CONDITION IS SATISFIED OR WAIVED.
FOR IMMEDIATE RELEASE
22 February 2012
PROPOSED CASH OFFER
by
Shell Exploration and Production (XL) B.V. ("Shell Bidco")
(a wholly-owned subsidiary of Royal Dutch Shell plc ("Shell"))
for
Cove Energy plc ("Cove")
1. Highlights
• Proposed Offer of 195 pence in cash for each Cove share.*
• The Proposed Offer values the entire issued and to be issued share capital of Cove at approximately £992.4 million and would represent a premium of:
• 73.3 per cent. to the closing price of 112.5 pence per Cove share as of 4 January
2012, the last business day prior to Cove's announcement of the sale process for the company; and
• 28.5 per cent. to the average closing price of 151.75 pence per Cove share over the five business days ending on 21 February 2012, the last business day prior to the date of this announcement.
• The making of an announcement of a firm intention to make the Proposed Offer by Shell Bidco (the "Firm Intention Announcement") is subject to, and conditional upon, the receipt of written consent of the Republic of Mozambique's Minister of Mineral Resources
(or through one or more delegated representatives) as required under Article 24.1 of the Exploration and Production Concession Contract relating to Cove's 8.5 per cent participating interest in the Mozambique Rovuma Offshore Area 1 Block (the "Rovuma Area 1 Interest"), such consent to be in a form satisfactory to Shell Bidco (the "Mozambique Consent").
• The Board of Cove believes that the level and nature of the Proposed Offer are such that it is in its shareholders' interests to progress matters with Shell Bidco to the point where such an offer can be made. Accordingly, the Board of Cove would expect to recommend the Proposed Offer of 195 pence in cash per Cove share, if made. It has been agreed that, if the Board of Cove does so recommend the Proposed Offer of 195 pence in cash per Cove share, each director of Cove will provide a hard irrevocable undertaking to accept the offer in respect of his own entire beneficial holdings of Cove shares and those of his family members and related trusts.
• Notwithstanding this announcement, the formal sale process, including the dispensations granted by the Panel on Takeovers and Mergers in connection therewith (as detailed in the announcement by Cove on 5 January 2012), shall continue.
* Pursuant to Rule 2.5(a) of the Takeover Code, Shell Bidco
reserves the right to reduce the level of the consideration
to be paid with the recommendation of the Board of Cove.
2. Introduction
The Boards of Cove and Shell Bidco are pleased to announce
the outline terms of a proposed cash offer for the entire
issued and to be issued share capital of Cove (the
"Proposed Offer"). Shell Bidco is an indirect
wholly-owned subsidiary of Shell.
The announcement of this Proposed Offer follows the decision
announced by Cove on 5 January
2012 to conduct a formal sale process for the company. Shell
Bidco is a participant in the formal sale process and, as a
result of such participation, Shell Bidco and Cove are near
agreement on
the full terms and conditions of a recommended cash offer by
Shell Bidco for Cove.
Shell Bidco is making this announcement regarding its
Proposed Offer as it requires additional time to ascertain
the timetable and process for obtaining the Mozambique
Consent and the terms of such consent.
Notwithstanding this announcement, the formal sale process,
including the dispensations granted by the Panel on Takeovers
and Mergers in connection therewith (as detailed in the
announcement by Cove on 5 January 2012), shall continue.
3. The Proposed Offer
The Proposed Offer is expected to be structured as a
recommended cash offer from Shell Bidco to acquire the entire
issued and to be issued share capital of Cove. Under the
terms of the Proposed Offer, each Cove shareholder would be
entitled to receive:
for each Cove share 195 pence in cash*
The Proposed Offer values the entire issued and to be issued
share capital of Cove at approximately £992.4 million and
would represent a premium of:
• 73.3 per cent. to the closing price of 112.5 pence per Cove
share as of 4 January 2012, the last business day prior to
Cove's announcement of the sale process for the company;
and
• 28.5 per cent. to the average closing price of 151.75 pence
per Cove share over the five business days ending on 21
February 2012, the last business day prior to the date of
this announcement.
* Pursuant to Rule 2.5(a) of the Takeover Code, Shell Bidco
reserves the right to reduce the level of the consideration
to be paid with the recommendation of the Board of Cove.
4. Pre-condition to making the Proposed Offer
The making of the Firm Intention Announcement is subject to,
and conditional upon, the receipt of written consent of the
Republic of Mozambique's Minister of Mineral Resources
(or through one or more delegated representatives) as
required under Article 24.1 of the Exploration and Production
Concession Contract relating to the Rovuma Area 1 Interest,
such consent to be in a form satisfactory to Shell Bidco (the
"Pre-Condition").
Shell Bidco reserves the right to waive, in whole or in part,
the Pre-Condition at any time at its sole discretion. Even if
the Pre-Condition is satisfied or waived, Shell Bidco has no
obligation to make the Firm Intention Announcement.
5. Position of Cove Directors
The Board of Cove believes that the level and nature of the
Proposed Offer are such that it is in its shareholders'
interests to progress matters with Shell Bidco to the point
where such an offer can be made.
Accordingly, the Board of Cove would expect to recommend the
Proposed Offer of 195 pence in cash per Cove share, if made.
It has been agreed that, if the Board of Cove does so
recommend the Proposed Offer of 195 pence in cash per Cove
share, each director of Cove will provide a hard irrevocable
undertaking to accept the offer in respect of his own entire
beneficial holdings of Cove shares and those of his family
members and related trusts.
Cove has agreed, for as long as the Board of Cove expects to
recommend the Proposed Offer, to assist Shell Bidco in
relation to obtaining any required governmental consents,
including the Mozambique Consent, as soon as reasonably
practicable after the release of this announcement.
6. Background to, and reasons for, the Proposed Offer
Shell's decision to announce this Proposed Offer for
Cove fits with Shell's strategic aim to drive forward
with its investment programme, to deliver sustainable growth
and to provide competitive returns to shareholders.
East Africa is a major prospective hydrocarbon province,
which has seen a significant increase in exploration activity
in recent years. Shell already has interests in Tanzania, and
the acquisition of Cove would mark Shell's entry into
exciting new hydrocarbon provinces in Kenya and Mozambique,
with significant potential for new LNG from recent gas
discoveries offshore Mozambique, and further complementary
exploration positions in East Africa.
In Mozambique, the Rovuma offshore basin is a frontier
exploration area that holds large resources of natural gas
reserves, suitable for LNG projects. According to Cove, the
play represents the potential for 30+ tcf and 6 LNG trains.
Shell understands that bringing these resources on stream is
a strategic priority for the Mozambican Government in order
to foster further economic and community development in the
country, and Shell is committed to being a partner in that
process.
Shell is one of the world's largest LNG producers, with
one of the most diverse LNG portfolios and access to
strategic global markets with equity sales volumes of 18.83
mtpa of LNG in 2011. Shell holds the largest equity share of
LNG capacity among IOCs - currently holding some 20.5 mtpa of
equity LNG capacity on-stream. Adding Cove's assets to
Shell's portfolio would strengthen and further diversify
Shell's existing global LNG portfolio of production and
development projects.
Furthermore, Shell has set industry records for LNG plant
construction times and operational start-ups, safely
delivering projects from concept to first production for/with
its partners. In joint ventures with partners, Shell
currently produces LNG in Australia, Brunei, Malaysia,
Nigeria, Oman, Russia and Qatar, with excellent production
reliability performance achieved at all these plants.
In addition to Shell's technical expertise, its
marketing and shipping know-how is designed to enable the
delivery of long-term added value together with project
partners. Shell has access to the key LNG markets of Europe,
Asia Pacific and North America. In 2011, Shell joint ventures
supplied more than 30 per cent. of global LNG volumes.
Shell would also bring its extensive project finance
experience across the LNG value chain. Shell's
experience in LNG project finance extends over many projects,
e.g.: Oman LNG, Nigeria LNG, Qatargas 4, Sakhalin.
Shell management is confident that its innovative
technologies, leading plant designs, unmatched LNG
operational experience and proven commercialisation
strategies, combined with the experience of the operator of
the Mozambique Rovuma Offshore Area 1 Block and the joint
venture partners can add significant value to the
project.
7. Financing of the Proposed Offer
Shell Bidco is expecting to finance the Proposed Offer, if
made, from its existing resources.
8. Sources and bases
(a) The value attributed to the fully diluted issued share
capital of Cove is based on
490,995,300 Cove shares in issue and 17,917,647 Cove shares
being subject to options under the share option schemes of
Cove, in each case as at 21 February 2012, being the
last business day prior to the publication of this
announcement.
(b) The stated share prices for Cove shares have been derived
from the Daily Official List and represent closing prices on
the relevant date(s).
A further announcement will be made as and when
appropriate.
This announcement is being made under Rule 2.4 of the
Takeover Code. It does not represent a firm intention to make
an offer under Rule 2.7 of the Takeover Code. Accordingly,
there can be no certainty that any offer will ultimately be
made, even if the Pre-Condition is satisfied or waived.
Enquiries
Shell
Shell Media Relations +44 207 934 5550
+31 70 377 8750
Shell Investor Relations
Europe +31 70 377 3996
United States +1 713 241 2069
Morgan Stanley & Co. Limited (Financial adviser to Shell
Bidco) +44 207 425 8000
Michael O'Dwyer
Ian Hart
Andrew Foster - Corporate Broking
Cove
Michael Blaha - Executive Chairman +44 20 3008 5260
John Craven - CEO +353 1 662 4351
Michael Nolan -Finance Director +353 1 662 4351
Standard Chartered (Financial adviser to Cove) +44 20 7885
8888
Amer Baig Geraldine Murphy Rob Tims
Hein Pieter Boers
Aditya Yadav
Cenkos Securities plc (Nominated adviser and broker to
Cove)
Jon Fitzpatrick +44 20 7397 8900
Ken Fleming +44 13 1220 6939
Joe Nally (Corporate Broking) +44 20 7397 8900
FTI Consulting (Cove Media Relations) +44 20 7831 3113
Billy Clegg
Edward Westropp
Morgan Stanley & Co. Limited ("Morgan Stanley") is
acting as financial adviser to Shell Bidco and no one else in
relation to the Proposed Offer and will not be responsible to
anyone other than Shell Bidco for providing the protections
afforded to the clients of Morgan Stanley nor for providing
advice in relation to the Proposed Offer, the contents of
this announcement or any other matter or arrangement referred
to herein.
Standard Chartered Bank ("Standard Chartered"),
which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for
Cove and for no one else in connection with the Proposed
Offer and will not be responsible to anyone other than Cove
for providing the protections afforded to clients of Standard
Chartered nor for giving advice in relation to the Proposed
Offer or any matter or arrangement referred to in this
announcement.
Cenkos Securities plc ("Cenkos Securities"), which
is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Cove
as nominated adviser and broker and is not acting for or
advising any other person and accordingly will not be
responsible to any person other than Cove for providing
advice in relation to the contents of this announcement.
Neither Cenkos Securities nor any of its affiliates owes or
accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort,
under statute or otherwise) to any person who is not a
customer of Cenkos Securities in connection with this
announcement, any statement contained herein or
otherwise.
Further information
This announcement is for information purposes and is not
intended to, and does not, constitute or form part of any
offer, invitation or the solicitation of an offer to
purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of, any securities.
This announcement has been prepared in accordance with
English law, the Takeover Code and the rules applicable to
companies whose shares are traded on the AIM market of the
London Stock Exchange, and information disclosed may not be
the same as that which would have been prepared in accordance
with the laws of jurisdictions outside England.
The release, publication or distribution of this announcement
in jurisdictions other than the United Kingdom may be
restricted by law or regulation and therefore persons into
whose possession this announcement comes should inform
themselves about and observe such restrictions. Any failure
to comply with these restrictions may constitute a violation
of securities laws of any such jurisdictions. To the fullest
extent permitted by law, Shell Bidco disclaims any
responsibility or liability for the violation of such
restrictions by such persons.
Shell Bidco reserves the right to elect with the agreement of
Cove and the consent of the Panel (where necessary) to
implement the proposed acquisition of the entire issued and
to be issued share capital of Cove by way of a court-approved
scheme of arrangement in accordance with Part 26 of the
Companies Act 2006.
Definitions and cautionary statement
Resources: Our use of the term "resources" in this
announcement includes quantities of oil and gas not yet
classified as Securities and Exchange Commission of the
United States ("SEC") proved oil and gas reserves
or SEC proven mining reserves. Resources are consistent with
the Society of Petroleum Engineers 2P and 2C definitions.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate entities. In this
announcement "Shell", "Shell Group" and
"Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell
plc and its subsidiaries in general. Likewise, the words
"we", "us" and "our" are also
used to refer to subsidiaries in general or to those who work
for them. These expressions are also used where no useful
purpose is served by identifying the particular company or
companies. "Subsidiaries", "Shell
subsidiaries" and "Shell companies" as used in
this announcement refer to companies in which Shell either
directly or indirectly has control, by having either a
majority of the voting rights or the right to exercise a
controlling influence. The companies in which Shell has
significant influence but not control are referred to as
"associated companies" or "associates"
and companies in which Shell has joint control are referred
to as "jointly controlled entities". In this
announcement, associates and jointly controlled entities are
also referred to as "equity-accounted investments".
The term "Shell interest" is used for convenience
to indicate the direct and/or indirect (for example, through
our 24 per cent. shareholding in Woodside Petroleum Ltd.)
ownership interest held by Shell in a venture, partnership or
company, after exclusion of all third- party interest.
This announcement contains forward-looking statements
concerning the financial condition, results of operations and
businesses of Shell and the Shell Group. All statements other
than statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward- looking statements
are statements of future expectations that are based on
management's current expectations and assumptions and
involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ
materially from those expressed or implied in these
statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Shell
and the Shell Group to market risks and statements expressing
management's expectations, beliefs, estimates, forecasts,
projections and assumptions. These forward-looking statements
are identified by their use of terms and phrases such as
"anticipate", "believe",
"could", "estimate", "expect",
"goals", "intend", "may",
"objectives", "outlook",
"plan", "probably", "project",
"risks", "seek", "should",
"target", "will" and similar terms and
phrases. There are a number of factors that could affect the
future operations of Shell and the Shell Group and could
cause those results to differ materially from those expressed
in the forward-looking statements included in this
announcement, including (without limitation): (a) price
fluctuations in crude oil and natural gas; (b) changes in
demand for Shell's products; (c) currency fluctuations;
(d) drilling and production results; (e) reserves estimates;
(f) loss of market share and industry competition; (g)
environmental and physical risks; (h) risks associated with
the identification of suitable potential acquisition
properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing
business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and
regulatory developments including regulatory measures
addressing climate change; (k) economic and financial market
conditions in various countries and regions; (l) political
risks, including the risks of expropriation and renegotiation
of the terms of contracts with governmental entities, delays
or advancements in the approval of projects and delays in the
reimbursement for shared costs; and (m) changes in trading
conditions. All forward-looking statements contained in this
announcement are expressly qualified in their entirety by the
cautionary statements contained or referred to in this
section. Readers should not place undue reliance on
forward-looking statements. Additional factors that may
affect future results are contained in Shell's 20-F for
the year ended 31 December 2010 (available at www.shell.com/investorand www.sec.gov). These
factors also should be considered by the reader. Each
forward-looking statement speaks only as of the date of this
announcement, 22 February 2012. Neither Shell nor any of its
subsidiaries nor the Shell Group undertake any obligation to
publicly update or revise any forward-looking statement as a
result of
new information, future events or other information. In light
of these risks, results could differ materially from those
stated, implied or inferred from the forward-looking
statements contained in this announcement.
Shell may have used certain terms, such as resources, in this
announcement that the SEC strictly prohibits Shell from
including in its filings with the SEC. U.S. investors are
urged to consider closely the disclosure in Shell's Form
20-F, File No 1-32575, available on the SEC website
www.sec.gov. You can also obtain these forms from the SEC by
calling 1-800-SEC-0330.
This announcement, including information included or
incorporated by reference in this announcement, may contain
"forward-looking statements" concerning the Cove
and its subsidiaries (the "Cove Group"). Generally,
the words "will", "may",
"should", "continue",
"believes", "expects",
"intends", "anticipates" or similar
expressions identify forward-looking statements. The
forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from
those suggested by them. Many of these risks and
uncertainties relate to factors that are beyond the
company's abilities to control or estimate precisely,
such as future market conditions and the behaviours of other
market participants, and therefore undue reliance should not
be placed on such statements which speak only as at the date
of this announcement. The Cove Group does not assume any
obligation to, and do not intend to, update these
forward-looking statements, except as required pursuant to
applicable law.
Nothing in this announcement is intended, or is to be
construed, as a profit forecast or to be interpreted to mean
that the earnings per Shell share or Cove share for the
current or future financial years will necessarily match or
exceed the historical published earnings per Shell share or
Cove share (as the case may be).
Notice to United States investors
The Proposed Offer, if made, will be made for securities of a
UK company and Cove shareholders in the United States should
be aware that this announcement and any other documents
relating to the Proposed Offer have been or will be prepared
in accordance with the Takeover Code, the AIM Rules and UK
disclosure requirements, format and style, all of which
differ from those generally applicable in the United States.
Cove's financial statements and all financial
information that is included in this announcement, or that
may be included in the formal offer documentation or any
other documents relating to the Proposed Offer, have been or
will be prepared in accordance with International Financial
Reporting Standards and may not be comparable to the
financial statements or other financial information of US
companies.
The Proposed Offer, if made, will be for the securities of a
non-US company which does not have securities registered
under Section 12 of the US Securities Exchange Act of 1934,
as amended (the "US Securities Exchange Act"). The
Proposed Offer, if made, will be made in the United States
pursuant to Section 14(e) of, and Regulation 14E under, the
US Securities Exchange Act, subject to the exemptions
provided by Rule 14d-1 under the US Securities Exchange Act
and otherwise in accordance with the requirements of the
Takeover Code. Accordingly, the Proposed Offer, if made, will
be subject to disclosure and other procedural requirements,
including with respect to withdrawal rights, offer timetable,
settlement procedures and timing of payments that are
different from those applicable under US domestic tender
offer procedures and laws. In the United States, the Proposed
Offer, if made, will be deemed made solely by Shell Bidco and
not by any of its financial advisers.
In accordance with and to the extent permitted by the
Takeover Code, normal UK market practice and Rule 14e-5 under
the US Securities Exchange Act, Shell Bidco or its nominees,
or its brokers (acting as agents) or their respective
affiliates may from time to time make certain purchases of,
or arrangements to purchase, Cove shares outside the United
States, other than pursuant to the Proposed Offer, before or
during the period in which the Proposed Offer, if made,
remains open for acceptance. These purchases may occur either
in the open market at prevailing prices or in private
transactions at negotiated prices. Such purchases, or
arrangements to purchase, will comply with all applicable UK
rules, including the Takeover Code and the rules of the
London Stock Exchange, and Rule 14e-5 under the US Securities
Exchange Act to the extent applicable. In addition, in
accordance with, and to the extent permitted by, the Takeover
Code, normal UK market practice and Rule 14e-5 under the US
Securities Exchange Act, Morgan Stanley and its respective
affiliates will continue to act as exempt principal traders
in Cove shares on the London Stock Exchange and engage in
certain other purchasing activities consistent with their
respective normal and usual practice and applicable law. Any
information about such purchases will be disclosed on a next
day basis to the Panel and will be available to all investors
(including US investors) from any Regulatory Information
Service including the Regulatory News Service on the London
Stock Exchange website, www.londonstockexchange.com.
It may be difficult for US holders of Cove shares to enforce
their rights and any claim arising out of the US federal
securities laws, since Shell Bidco and Cove are incorporated
under the laws of countries other than the United States, and
some or all of their officers and directors may be residents
of countries other than the United States. US holders of Cove
shares may not be able to sue a non-US company or its
officers or directors in a non-US court for violations of the
US securities laws. Further, it may be difficult to compel a
non-US company and its affiliates to subject themselves to a
US court's judgment or jurisdiction.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in one per cent. or more of any class of relevant
securities of an offeree company or of any paper offeror
(being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure
following the commencement of the Offer Period and, if later,
following the announcement in which any paper offeror is
first identified. An Opening Position Disclosure must contain
details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company, and (ii) any paper
offeror(s). An Opening Position Disclosure by a person to
whom Rule 8.3(a) applies must be made by no later than 3.30
p.m. (London time) on the tenth business day following the
commencement of the Offer Period and, if appropriate, by no
later than 3.30 p.m. (London time) on the tenth business day
following the announcement in which any paper offeror is
first identified. Relevant persons who deal in the relevant
securities of the offeree company, or of any paper offeror
prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in one per cent. or more of any class of
relevant securities of the offeree company or of any paper
offeror must make a Dealing Disclosure if the person deals in
any relevant securities of the offeree company or of any
paper offeror. A Dealing Disclosure must contain details of
the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
paper offeror, save to the extent that these details have
previously been disclosed under Rule 8. A Dealing Disclosure
by a
person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the business day following
the date of the relevant dealing.
If two or more persons act together pursuant to an agreement
or understanding, whether formal or informal, to acquire or
control an interest in relevant securities of an offeree
company or any paper offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also
be made by the offeree company and any other offerors and by
any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).
Details of offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table
on the Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in
issue, when the Offer Period commenced and when any offeror
was first identified. If you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a
Dealing Disclosure, you should contact the Panel's
Market Surveillance Unit on +44 (0)20 7638
0129.
Publication on websites
A copy of this announcement will be made available free of
charge, subject to certain restrictions relating to persons
resident in certain restricted jurisdictions, on Shell's
website at www.shell.com/home/content/investor/
and Cove's website
at www.cove-energy.com by no later than 12
noon on 23 February 2012.