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Key Points:
- Vintage will acquire all of Galilee’s shares in a 2-for-1 share exchange under a scheme of arrangement.
- The merged entity will create a diversified portfolio of gas and oil assets across eastern Australia.
- Galilee’s board recommends the Scheme to shareholders, pending no superior offer and a favorable independent expert report.
Vintage Energy Ltd (ASX:VEN) and Galilee Energy Limited (ASX:GLL) have entered into a binding scheme implementation deed (SID), whereby Vintage will acquire all fully paid ordinary shares in Galilee, as announced on 15 August 2024. This acquisition will be conducted through a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth), subject to the approval of Galilee shareholders and the satisfaction of several conditions.
Under the terms of the scheme, Galilee shareholders will receive two fully paid ordinary shares in Vintage for every one fully paid ordinary share they hold in Galilee on the record date. If approved and implemented, the merger will result in the formation of a new entity—the Merged Group—where Vintage shareholders will own 60% of the issued share capital and Galilee shareholders will hold 40%.
Strategic Rationale and Benefits of the Merger
The merger is driven by a shared goal of creating a stronger, more diversified company that is well-positioned to capitalize on the favorable long-term outlook for onshore gas and oil in eastern Australia. By combining their financial resources, assets, and expertise, the Merged Group aims to generate significant value for shareholders.
A major benefit of the merger is the creation of a complementary portfolio of diversified oil and gas assets across eastern Australia’s major onshore sedimentary basins. The combined entity will have access to a broader and more varied asset base, providing increased optionality and risk diversification. Galilee’s highly prospective gas acreage and Vintage’s revenue-producing assets in the Cooper Basin will be central to the Merged Group's strategy to address the ongoing gas supply shortage in Australia’s east coast market.
The new entity will be led by a board and management team with deep industry experience and established relationships in the oil and gas sector. The leadership team has a proven track record of success in exploration, appraisal, and development, as well as creating value through mergers and acquisitions. With this experience and access to a broader set of assets, the Merged Group will be better positioned to pursue growth opportunities and increase shareholder value over the long term.
Vintage shareholders stand to benefit from exposure to a company with a stronger balance sheet, enabling greater financial stability and potential for future growth. The merger also creates a platform for the new entity to leverage its expanded resource base and pursue additional projects and acquisitions in the energy sector.
Support from Galilee’s Board of Directors
Galilee’s board of directors has unanimously recommended that its shareholders vote in favor of the Scheme, provided there is no superior offer and subject to the conclusion of an independent expert’s assessment that the Scheme is in the best interest of shareholders. The board believes that the merger with Vintage is the best path forward for Galilee, as it offers shareholders significant upside through ownership in a larger, more financially secure company.
Next Steps for Shareholders
At this stage, Galilee shareholders are not required to take any action. The next steps include seeking Court approval for Galilee to convene a Scheme Meeting, where shareholders will be able to vote on the proposal. This meeting is expected to take place in the coming months.
