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SDX - A Potential Takeover Target?

lse:sdx

#1

Given the total apathy shown by SDX with regard to the low share price and the lack of effort being put into promoting the company, probably the best scenario from a retail investor’s point of view is that SDX becomes a takeover target.

The following article was written on 3rd June 2019 and it suggested just that

As the author points out that given the low valuation SDX could be seen as a takeover target. Coincidentally the share price on the day the article was written was 25.75p, today’s price.

However, since that article was written South Disouq has come online, has ramped up to the plateau rate ahead of schedule, the South Disouq reserves have increased by 35% and the Moroccan reserves have increased by 50%. The more interesting wells are still to be drilled later this year.

If the author thought SDX could be a takeover target in June 2019, it has to be now.

Apache Corporation, mentioned in the article, has a market cap of $11.6 billion.
They have assets in Egypt and if they wanted to expand into Morocco where the fiscal terms are attractive, SDX could be a good fit.

Some would say that Waha or Ingalls would not sell but they bought in around 30p, if an offer was in the high 30’s or 40p they might be tempted to cut and run.

Most CEO’s worry about a low share price because of the risk of takeover, ours doesn’t seem bothered. With a fairly static share price and increasing value of their assets, SDX will just keep getting more attractive to potential suitors.


#2

than the question pops up , what would be a reasonable price ?


#3

Well everyone has their price to sell. In January 2019 if I had been offered 40p to sell my SDX shares I would have dismissed it out of hand.

A year later after a 38% fall in the share price in 2019 and 10 months silence from the management, if someone offered me 40p for my shares now I would bite their hand off.

In the January Update our CEO says;

""2019 was a successful year for SDX, with all key metrics being ahead of expectations, success with the drill bit and our key South Disouq development project completing on time and on budget. "

Well it may have been a successful year for him on nearly a US$1,000 a week but for shareholders it was an awful year.

I suspect there is an army of investors in SDX who would love to get out. They will all have a price in mind that they would take to let go of their shares. As for the large institutional investors, who knows but it hasn’t been a spectacular investment for anyone.

If we do see an approach it would at least shake the company up and might finally get them to speak to the investment media, even if it was just to say accept the offer.