South Korea’s national oil company has launched a £1.7billion hostile takeover bid for one of the UK’s biggest oil and gas explorers.
Korea National Oil Corporation (KNOC) will take its proposal direct to shareholders in Dana Petroleum but has not increased its offer from the £18 a share rejected by the Aberdeen-based firm last week.
KNOC said yesterday it had already received letters of intent from 48.6% of Dana investors to sell their shares. These include Schroders, which holds 15.47% of the company, BlackRock, with 3.16% and JPMorgan, 2.58%, however, they are not binding commitments.
Dana has refused to open its books to KNOC without a confidentiality agreement and said the current bid failed to recognise so-far undisclosed developments which could “materially increase” its oil production and reserves.
These developments are thought to include the potential £200million-plus acquisition of certain UK North Sea assets from Canadian oil and gas company Suncor, which has been the subject of considerable press speculation but on which Dana has not commented publicly.
KNOC’s interest in Dana is part of a drive to snap up foreign energy resources and secure South Korea’s future supplies. The offer values Dana at a premium of almost 60% to its closing share price prior to it announcing it had received a takeover approach. Shares were up 6% yesterday to £17.98 – just 2p below KNOC’s offer price.
KNOC senior vice-president Seong-Hoon Kim said the company was disappointed by the response of Dana and had been left with no alternative but to take its offer directly to shareholders.
He said: “We believe that our offer fully and fairly reflects all of Dana’s recently announced and ongoing developments, together with its exploration potential.”
Dana is due to publish half-year results on Friday, when it has said it will provide a full update on its production and exploration activities and near-term development programme. In the meantime, it has continued to urge shareholders to take no action in respect of the offer.
The KNOC proposal values Dana at £1.87billion when including the UK company’s convertible bonds.
David Barclay, a divisional director at investment manager and financial-planning specialist Brewin Dolphin in Aberdeen, said: “The decision by KNOC to ‘go hostile’ underscores its need to acquire reserves. This attempted acquisition of Dana comes only about 12 months after the takeover of Venture Production by Centrica, and may lead to another of Aberdeen’s plcs disappearing from the stock market. A further point of interest is that Dana has a 27% stake in Aberdeen-based Faroe Petroleum.
“Investors will await with interest any indication of what KNOC intends to do with this stake if successful in the Dana takeover.”