CALGARY – Savanna Energy Services Corp.’s board is urging shareholders to reject a hostile takeover offer from Total Energy Services Inc., calling it an opportunistic attempt to buy at the bottom of the market.

“This unsolicited takeover offer is highly opportunistic and timed to deprive Savanna shareholders of the value of significant positive recent market changes and the actions of Savanna has undertaken to solidify the company’s balance sheet,” Savanna chairman Jim Saunders said in a release Friday.

Total Energy announced its intention to offer a day after Alberta Investment Management Corp (AIMCo) agreed to finance Savanna with $200 million debt-with-warrants and a private placement of 13 million shares for gross proceeds of $18.85 million.

“At the end of the day, the fact that they’re calling us opportunistic is basically them confirming that our board and management is more astute and shrewd than they are,” Total president and CEO Daniel Halyk said in an interview.

“Who do you want running your company, the guys who sell at the bottom or the guys who buy at the bottom?” he said, referring to Savanna’s recent equity raise.

One industry insider, who asked to remain anonymous because of dealings with both Total and Savanna, said the fact that Total is offering shares rather than cash “means that Savanna shareholders should be able to participate in the upside.”

Savanna president and CEO Chris Strong did not immediately respond to a request for comment Friday. The company’s release said it had generated interest from other potential buyers and described Total’s hostile offer as a “no premium” bid – which drew a reaction from Total, as the war of words between both sides intensifies.

“That’s pretty disingenuous,” Halyk said. “Even in their own circular, page 8, they show the implied premium from the day the bid was made.”

Savanna shares have risen since Total first announced its intention to bid for Savanna, from $1.47 per share to $1.97 per share on Friday, as oil and gas prices have strengthened.

Halyk said it was “common sense” that Savanna shares would rise in value following an expression of interest from an outside company to purchase those shares.

Total’s shares have also appreciated, rising from $13.04 per share to $15.11, which means the implied value of its bid for Total is now $1.96 per share of Savanna in a deal now worth $232 million plus debt.

Financial Post

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