Cordero Energy Accepts Ember Resources Acquisition Bid

Against the odds, Cordero Energy Inc. (CDEYF.PK) has agreed to accept the latest acquisition bid from Ember Resources Inc. (EBRRF.PK).

On Friday, Ember and Cordero said they had entered into an arrangement agreement that would see Cordero shareholders receive C$5.50 in cash, up to a maximum of $70-million or 2.683 shares of Ember for each Cordero share. 

Cordero's board has unanimously endorsed the deal, which carries a mutual break fee of $3.5 million, and insider owning almost 10% of Cordero shares are already accepted the deal. Ember Resources said has commitments from 26.5% of shareholders. The remaining Cordero shareholders have until Sept. 8. to make their decision.

Observers of the deal have been weary about Ember's chances of swaying the 66 2/3% of shareholders needed to close the deal, and noted that the current value of the deal based on Ember's current share price of C$1.71 at Thursday's close, had fallen well below the deal value when the offer was made.

Based on Ember's assumption that 40% of all the shares outstanding will be bought for cash, with the remaining 60% of the shares outstanding converted for stock, the total bid value is now about $4.76, based on Ember's current share price of C$1.80, up C$0.09 through morning trading.  At the time of the announcement, a total bid value of around C$5.30. a weighted average calculation based on an Ember share price of C$2.17, resulted in a total bid value of around C$5.30.

Importantly, the current bid value is well below ENMAX Acquisition Corp.'s all cash offer of C$5.20, which included a conditional C$0.45 special dividend, that Cordero shareholders rejected a week ago.