SilverBow has refused to enter into good faith negotiations or undertake substantive due diligence to assess the best path forward for unlocking value on behalf of all shareholders – necessitating the need for fresh perspectives in the Boardroom
Kimmeridge drops plans to takeover Silverbow Resources. (Credit: WORKSITE Ltd. on Unsplash)
Kimmeridge, an energy-focused alternative asset manager and the largest shareholder of the Texas-based shale driller SilverBow Resources has withdrawn its merger proposal for SilverBow.
Kimmeridge proposed eight different potential strategic transactions for SilverBow to establish a foundation for long-term value creation amid continued underperformances.
Last month, the asset manager made an offer to combine its Kimmeridge Texas Gas (KTG) with SilverBow, along with an associated $500m equity investment.
The proposed merger would have created a pure-play Eagle Ford shale operator with an enterprise value estimated at around $3.6bn.
The transaction offered SilverBow shareholders a unique opportunity to participate in a larger company that would lead the next phase of consolidation in the Eagle Ford.
Kimmeridge published financial and operational data on KTG, pre-populated a data room, and prepared itself for a potential combination.
However, SilverBow Board has rejected the proposal through its proxy solicitation materials and then claimed the need for more information.
SilverBow has failed to take any steps that a reasonable counterparty would and hasn’t even asked for access to our data room, said Kimmeridge.
In addition, SilverBow has not suggested any counterproposals or alternative structures.
Kimmeridge most recently asked the Board to provide a clear view of its relative value and the terms under which they would be willing to transact.
Kimmeridge in its statement said: “Based on public statements made by the Company, the Board has such valuation information on hand, yet the Company has not responded.
“It appears that SilverBow is not willing to seriously engage in any discussions of mergers in which it would be the smaller party. Instead, the Board and management team are focused on maintaining their positions and compensation.
“Given SilverBow’s lack of engagement, Kimmeridge sees no pathway towards a transaction by the April 26, 2024 deadline that we had put forward more than a month ago.”
Kimmeridge said that SilverBow is not willing to seriously engage in any discussions of mergers and is withdrawing its proposal to focus on improving SilverBow’s governance.