Norway's DNO confirms 152p a share takeover bid for Faroe Petroleum
DNO has confirmed its 152p per share cash offer for Faroe Petroleum.
Dno Asa
968.25p
15:20 24/04/24
Faroe Petroleum
160.40p
17:00 13/02/19
FTSE AIM 100
3,638.66
16:44 24/04/24
FTSE AIM 50
3,973.49
16:44 24/04/24
FTSE AIM All-Share
754.69
16:50 24/04/24
Oil & Gas Producers
9,657.38
17:09 24/04/24
The Norwegian oil producer, which already owns a 22.8% stake in Faroe, said the offer values Faroe at around £610m.
"This full and fair offer provides Faroe shareholders a rare opportunity to exit their relatively illiquid AIM-listed positions at an attractive price in a volatile and uncertain market for oil and equities," said DNO's executive chairman, Bijan Mossavar-Rahmani.
"DNO is paying a significant premium of 44.8% for Faroe on the basis of the unaffected share price on 3 April 2018, ahead of speculation about a possible DNO takeover. Faroe has failed to deliver consistent shareholder returns over the last 15 years in part as a consequence of dilutive share issues, dilutive options schemes and recent growth-dilutive asset transfers."
Faroe reaffirmed its previous statement from November that the offer is "opportunistic" and "substantially undervalues" the group, as it urged shareholders to take no action.
Non-executive chairman John Bentley said: "DNO's highly opportunistic offer is not only at a substantial discount to the value of the company but also at a substantial discount to comparable portfolio transactions and a substantial discount to the average of all UK takeovers in the last 10 years.
"Faroe is widely regarded as one of the pre-eminent North Sea E&P companies with a high quality, full cycle and diversified asset base and a management team that, time and again, has demonstrated its ability to create value through exploration and active portfolio management. As such, Faroe would solve DNO's strategic challenges and Faroe shareholders should receive an appropriate premium which is not currently reflected in DNO's offer."
Faroe pointed out that the offer represents a premium of only 21% to the company's closing share price prior to the announcement, which is about half the average premium paid on all UK takeovers over the last 10 years.
DNO said acceptances for the offer must be received by 1300 GMT on 2 January, unless the offer period is extended.
RBC Capital Markets analyst Al Stanton said the timing of this offer, with closing the first day back from the extended Christmas break, will be awkward for management but also difficult for investors who will be considering the offer while assessing alternative investments in a jittery UK market.
"Those investors that can should, in our view, consider a switch from Faroe into DNO - we think the Oslo-listed firm could re-rate on this acquisition.
"However, in the current choppy equity markets and given the uncertain outlook for the oil price in 2019 (despite the OPEC’s promised production cuts) UK-focused investors are likely to bide their time…unless a London-listed peer stands up and makes a compelling call of their capital this Christmas."
At 1330 GMT, Faroe shares were down 0.4% to 152.40p.