Norway's DNO confirms 152p a share takeover bid for Faroe Petroleum

12th Dec 2018 13:38

(Sharecast News) - DNO has confirmed its 152p per share cash offer for Faroe Petroleum.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 already said back in November that the unsolicited offer from DNO was "opportunistic" and "substantially undervalues" the group. Non-executive chairman John Bentley said at the time: "The board is determined to defend our shareholders' rights to receive an appropriate premium for a fully funded business which is actively progressing the delivery of its highly attractive growth prospects and is the only platform available which solves DNO's strategic challenges."We believe that Faroe is worth substantially more than 152p per share and we urge shareholders to reject DNO's opportunistic, unsolicited and inadequate offer."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.