Venture rejects £1.3bn Centrica bid

13th Jul 2009 07:00

Aberdeen-based oil and gas firm Venture Production has rejected last Friday's 845p-a-share hostile cash bid from energy giant Centrica."The board has unanimously concluded the offer is not in the best interests of shareholders and should be rejected by shareholders," read a statement Monday.Bosses say the £1.3bn offer "substantially undervalues Venture given its near and long term prospects and the strategic position and high quality of its UK gas reserves and resources."The unsolicited bid, made after the stock market closed on Friday, came as the British Gas-owner bought private equity group 3i's entire 5.4% stake in Venture. It now owns 29% of the business.Centrica has also entered into a conditional agreement to acquire all of the convertible bonds held or controlled by 3i.It's said the offer price will not be increased unless a competitive situation arises.One of the biggest shareholders in Venture has said the gas producer is worth at least £10 a share and urged other investors to reject Centrica's bid, according to reports.Larry Kinch, one those who founded Venture in 1996 and owner of 7.4% of the firm, says Centrica had "gone about it the wrong way".Sam Laidlaw, chief executive at Centrica, called it "an attractive offer". The bid is at an 88% premium to the price in January when speculation about an offer first surfaced."This transaction will provide the enlarged group with an enhanced position in the North Sea and a diversified asset portfolio across a number of asset and production areas. Centrica's backing will provide the financial strength required to develop Venture's business fully," Laidlaw said.In a separate statement, Venture confirmed gas in the eastern section of the Marram field in the East Irish Sea and is still drilling the Andrea exploration well 48/15b-10 in the Southern North Sea.Venture says Andrea has the potential to be its largest discovery to date with pre-drill recoverable resource expectations of between 3 and 44 million barrels of oil equivalent (MMboe)."On a risked basis the Andrea well was one of the top opportunities in our 2009/10 drilling programme and the information so far is extremely encouraging," said chief executive Mike Wagstaff.