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14 August 20232 minute read

DLA Piper advises Strike Energy on its AUD142 million acquisition of Talon Energy

Global law firm DLA Piper is advising Strike Energy Limited (ASX:STX) on its all-scrip AUD142 million acquisition of Talon Energy Limited (ASX:TPD) via a scheme of arrangement combined with a demerger of Talon’s Mongolian assets and the provision of a AUD$6 million secured convertible debt facility to provide operational funding to Talon during the implementation period.

Strike, an Australian energy and fertiliser company, and Talon, an Australian oil and gas explorer, each operate and hold 55% and 45% (respectively) of the L23/EP447 Joint Venture at the Walyering Gas Field. Accordingly, the transaction will result in 100 per cent ownership and control of the Walyering Gas Field by Strike.

The acquisition is being conducted via a shareholder approved scheme of arrangement.. The demerger allows Talon shareholders to retain a pro-rata ownership of Talon’s Mongolian assets via a spin-out of those assets into a new special vehicle, which will be completed during the scheme process.

In support of the acquisition, Strike has made available to Talon an interim secured convertible debt facility for up to AUD6 million under which Strike may upon maturity instead elect to convert any outstanding facility into Talon shares.

“It’s great to build on our long standing relationship with Strike via a further transaction to bolster Strike’s presence in the Perth basin and build its immediate term future cash flows,” said Perth-based James Nicholls, Corporate Partner, DLA Piper.

“Moreover, the transaction represents a further enhancement of market practice regarding these collateral ‘life boat’ demergers, whilst also reflecting the core necessities of innovation and deal discipline in order to consummate transactions in the current M&A market” James added.

DLA Piper's team was led by James Nicholls (Partner). Assistance in respect of the scheme and contingent consideration streams was provided by Kirsty Hall (Senior Associate), Emily Donley (Solicitor) and Courtney McVeigh (Graduate). The debt facility streams were led by Owen Alcorn (Partner) with assistance from Sharon Carey (Senior Associate) and Madina Eira (Graduate).

For the 13th consecutive year, DLA Piper was the highest-ranked legal advisor in the world for M&A deal volume, according to Mergermarket's league tables. The firm was involved in 1,131 transactions worldwide in 2022.