Faroe Petroleum holds firm as DNO urges shareholders to accept offer

27th Dec 2018 15:09

(Sharecast News) - Norwegian oil producer DNO has encouraged the shareholders of Faroe Petroleum to accept its 152p a share offer by 2nd January.In a statement on Thursday, the company said that if it does not receive sufficient acceptances for its offer to be unconditional, it will choose to either lapse the offer or extend it. If the offer is lapsed, DNO won't be able to make a new offer for another 12 months, and "there can be no assurances as to DNO's longer-term ambitions," it said."Is it sensible - or self-serving - for the Faroe board of directors to continue to claim that the DNO offer is 'opportunistic' and to advise shareholders to do nothing when provided the certainty of a cash offer of 152 pence in these depressed market conditions?" it said.But AIM-listed Faroe held firm on Thursday, arguing that there was "nothing substantially new" in DNO's announcement."DNO continues to seek to justify its offer based on a premium referenced to Faroe's share price on 3 April 2018, which fails to recognise the significant achievements Faroe has delivered since then, including the Iris/Hades and Agar discoveries, and the recently announced Equinor asset swap," it said.Faroe said the reality is that the DNO bid offers a premium of just 1% to the undisturbed three-month volume-weighted average share price and 21% to the closing share price prior to the offer announcement. It pointed out, once again, that this is about half the average premium paid on all UK takeovers over the last 10 years."The board reaffirms its previous statements that the offer is opportunistic and substantially undervalues Faroe, and encourages all shareholders to take no action."The company had already said that the offer substantially undervalues its "high quality, full cycle and diversified North Sea business".DNO, which announced its offer for Faroe on 26 November, already holds a near-30% stake in the company.At 1540 GMT, Faroe shares were down 0.7% at 151p.