Privately owned BW Group has made an offer to acquire the outstanding shares in BW Energy, although the board of the latter has recommended against the purchase.
BW Group acquired an additional parcel of shares on November 29, at which point it held 40% of BW Energy. This triggered a requirement to make an offer, or reduce its stake.
The company made its move on December 13, offering 27 krone ($2.6) per BW Energy share.
BW Energy has today said the offer “is below the range for fair financial value” in its shares. The board said its longer term potential is greater than the parent company’s offer, even while the offer does represent a premium to the current price.
In early December, BW Energy’s share price fluctuated between 23 and 25 krone ($2.2-2.4). In November, it reached a high of 29.3 krone ($2.8).
BW Energy’s board went on to say the offer may reduce liquidity in its shares. The company statement said the BW Energy offer intended to offer cash to those shareholders that wanted it now. “At the same time [it is] hoping that shareholders with a long-term perspective will continue to support the company through joint ownership in the future”.
BW Energy went public via an IPO in February 2020 in Oslo. At that time, BW Offshore had 38.77% and BW Group 35.13% in BW Energy. Paying out dividends in kind, BW Offshore transferred shares to BW Group, taking it to 39.9% in BW Energy as of November 28.
Pareto Securities provided an analysis of the offer, finding it was not fair. The analysts based this on estimates of future cash flow from BW Energy’s two main assets. These are Dussafu and Golfinho, in Gabon and Brazil respectively.
“The value gap increases further when we add risked values of identified development projects to extract more reserves as well as the Maromba and Kudu discoveries.”
One complicating factor identified by Pareto was that BW Offshore may accept the offer. BW Offshore has a 22.5% stake in BW Energy and is 49.9% owned by BW Group.
BW Offshore is in the midst of its own offer for another part of the group, BW Ideol.
The company has teamed up with Kerogen Investments No. 48, Larochette Invest and other shareholders, which together hold 84.7% in BW Ideol. The group is offering 12 krone ($1.1) for BW Ideol shares.