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Dragon Oil agrees $1.14bn Dubai buy-out move |
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11.3.2009 |
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Dragon Oil has agreed to become a full subsidiary of Dubai's national oil company, its majority shareholder, in a deal worth $1.14bn (£693m).
Advisers to the Dublin and London-listed oil and gas producer, which operates in the Caspian Sea, negotiated for five months with Emirates National Oil Company (Enoc), which owns 52 per cent of Dragon shares and has been expected for years to table a take-out bid.
The two companies agreed a cash offer of 455p a share for Dragon's minority shareholders. The offer values Dragon at $2.36bn and requires approval of 75 per cent of minority shareholders to complete.
The offer is a 35 per cent premium to the closing share price on June 3, the day before Enoc approached Dragon with interest in paying a "modest" premium.
Analysts questioned whether the offer was fair value when the bidder is a majority shareholder facing no obvious competitors. "We think this level of bid passes too high a proportion of future value to Enoc and represents a level that Enoc can afford to pay, not what the stock is worth" said analysts at NCB.
They raised their target price for Dragon shares to 805p, based on their assumed value of the offshore oil and gas fields in Turkmenistan that are Dragon's crown jewel.
"We have brought [Enoc] to within a range of what is recommendable," said Philip Wolfe, an HSBC banker who advised Dragon over the unusually long offer period.
The offer is "fair and reasonable", according to the independent committee Dragon appointed to assess the offer and avoid conflicts of interest.
Enoc, based in Dubai, said a takeover of Dragon would be a "major step" to its goal of becoming an integrated oil and gas producer.
Dubai's deep indebtedness has loomed over the transaction since the June approach. Some analysts said at the time that Enoc, owned by the emirate's government, would be forced to sell its share in Dragon rather than make a competitive offer. Dragon held cash and deposits totalling $875m on June 30.
Standard Chartered and Goodbody advised Enoc, while HSBC and Davy advised Dragon.
Dragon shares rose 36½p to 446½p.
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Source:www.ft.com |
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