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Dana Petroleum buys more time against hostile KNOC bid August 29, 2010

Posted by mytruthaboutoil in Oil (general).
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Dana Petroleum has bought more time in its attempt to fend off its hostile predator, the state-controlled Korean oil firm KNOC, by delaying the announcement of a major acquisition.

The company held off from the announcement – believed to be a £240m deal to buy North Sea assets from Canadian firm Suncor – when it reported results .

Because Dana has shared market-sensitive information with KNOC about the acquisition, the Koreans cannot buy shares in the FTSE 250 company on the market or secure irrevocable agreements from shareholders backing the hostile bid. KNOC’s hands will only be untied once the deal is publicly announced.

It is understood that Dana will exploit the breathing space the highly unusual situation has created to take time mapping out its defence strategy, which must be announced no later than 8 September.

The company has appointed an auditor to come up with an external valuation of the company, the Guardian has learnt. Dana believes that the £18-a-share hostile bid does not fully reflect the value of the imminent acquisition and the company’s other growth plans.

It will unveil the acquisition and the valuation report as key planks of its defence strategy. Shareholders hope that KNOC will be persuaded to up its offer in return for the recommendation of the Dana board. Its shares closed at £18.10.

Yesterday the FTSE 250 company reported a 274% increase in profits for the first six months of the year.

The North Sea and Egypt-focused producer and explorer did not refer to the takeover battle apart from noting the 8 September deadline and urged shareholders not to respond to the bid before then.

Analysts at Citigroup said the results were largely in line with expectations and of “relatively limited significance” in the context of the bid battle with KNOC. The Korean company issued a statement saying that the results contained no new material information to justify increasing the value of its offer.

KNOC has already signed up 49% of Dana’s shareholders in non-binding support of the bid. The Korean government has given the company a $6.5bn war chest to secure more oil and gas to reduce the country’s dependence on imports.

KNOC, which first approached Dana in June, published its offer document on Wednesday, which gives Dana shareholders until 23 September to respond.

It has already had a previous offer of £17-a-share rejected.



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