California Energy Calls Off Bid for Rival Magma Power : Takeover: Insufficient number of San Diego geothermal company shareholders tendered stock in response to $38.50-per-share offer. Hostile suitor hints at legal action.
California Energy Co. called off its hostile $924-million takeover bid for rival geothermal energy producer Magma Power on Friday after an insufficient number of Magma shareholders tendered stock in response to its $38.50-per-share offer.
Omaha-based California Energy, which set a deadline of midnight Friday to receive Magma shares, would not disclose how many shares were tendered. The hostile suitor also solicited consent forms to call a special shareholder meeting to review its offer but only 41% of Magma shareholders had agreed to the meeting as of Friday.
But the last shot may not have been fired in the high stakes takeover battle involving the nation’s two largest geothermal companies. In a news release, California Energy accused Magma executives of a “blatant breach of fiduciary obligations,” hinting at further legal action.
San Diego-based Magma Power officials would not comment late Friday on the California Energy announcement. A spokesman said warily that the company was “studying” the news release.
California Energy shares closed up 50 cents at $16.50 in New York Stock Exchange trading while Magma Power shares were up 75 cents at $35.50 in over-the-counter trading. California Energy announced the termination after the markets closed Friday.
In its news release, California Energy said its effort to call a special shareholder meeting was stymied by the refusal of Magma’s two largest shareholders to submit consent forms. Those investors were Dow Chemical, which owns 21% of Magma shares,, and the B.C. McCabe Foundation, which owns 12%.
The takeover battle began Sept. 19 when California Energy wrote Magma Power’s board of directors offering $35 a share, or $840 million in stock and cash for the company. A merger would create the world’s largest geothermal concern and give it a strong position in the newly competitive worldwide power market, California Energy Chairman David Sokol said.
California Energy launched its bid on Oct. 6, offering $35 cash for the first 51% of Magma shares tendered.
In response, Magma Power launched a strenuous effort to persuade large institutional stockholders to ignore California Energy’s offer, saying it was “opportunistic” and that Magma shares soon would be worth more because of new projects planned in the Philippines and Indonesia. Magma said last month that it was holding discussion with other companies about possible business combinations.
After several analysts predicted California Energy would have to up its bid to $40 a share to succeed, California increased its offer in early November to $38.50 per share, apparently to no avail.
