British oil and gas producer Capricorn Energy has scrapped the plan to merge with Israeli gas group NewMed Energy after shareholders’ opposition.

Activist investor Palliser and some of the biggest shareholders of Capricorn had opposed the merger plan.

The latest decision follows a strategic review of Capricorn launched by the new directors, who entirely replaced the company’s board, including its chief executive, as proposed by Palliser earlier this month.

In a press statement, Capricorn said: “Based on its work to date in respect of the Strategic Review and taking into consideration the views expressed by shareholders on the NewMed Transaction, the board has resolved to advise shareholders to vote against the NewMed Transaction.

“The board believes this action is necessary to enable the consideration of all potential strategic options for the company, including the material return of capital to shareholders and potential engagement with respect to alternative options.”

NewMed said that the two companies have ‘mutually agreed’ to terminate the merger transaction.

As per the deal, which was signed in September 2022, Capricorn would have paid $620m in special dividends to its shareholders, which would equate to £1.72 per share.

This is the second deal rejected by Capricorn. In September 2022, the company terminated its merger plan with Tullow Oil.