Mobil oil refinery
A view of the Mobil oil refinery at Altona in Melbourne June 27, 2008. Reuters/Mick Tsikas

Drillsearch Energy and Beach Energy have entered into a $1.2 billion merger on Friday with the full support of Kerry Stokes’ Seven Group Holdings. The merging companies claimed that the amalgamation will enable them to save $20 million per year.

Under the merger, each Drillsearch shareholder will receive 1.25 Beach shares for every stock they hold in the company. Stokes, whose Seven Group Holding holds 19.9 percent shares in both the companies, will also get around 20 percent share in the new company after the merger.

However, the companies rejected the idea that Stokes had any role to play in driving the merger of both companies.

“Seven Group, obviously, had an interest in it as the major shareholder in both entities but that’s it,” Business News quoted Beach Chairman Glenn Davis as saying. “What helped drive this was the fact that Jim (Drillsearch Energy Chairman Jim McKerlie) and I and the boards have been talking about this for a very long time, and like all deals, timing is everything and now is the right time.”

Ryan Stokes, the chief executive of Seven Group Holdings said that the merger of the two Cooper Basin companies would create Australia’s biggest mid-tier oil and gas company.

“We welcome this merger proposal,” Stokes said. “We strongly believe the combination of Beach and Drillsearch brings together two of the best mid cap oil and gas companies and creates significant value in synergies and growth opportunities.”

Seven Group Holdings acquired large stakes in both companies earlier this year, leading to speculations of the merger.

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