Investor blow to oil giant merger

THE merger of two of London’s biggest oil firms has been thrown into doubt after a major investor questioned the deal.

Legal & General Investment Management (LGIM) warned it had ‘strong reservations’ about the proposed £1.4bn tie-up between Capricorn Energy and Tullow Oil announced earlier this month.

LGIM, which is a major shareholder in both Capricorn and Tullow – owning stakes of 3.9pc and 1.7pc in each business respectively – said there was ‘no clear strategic rationale’ for the merger.

It added the deal was ‘highly unattractive’ to Capricorn shareholders.

LGIM also said the deal would give Capricorn further exposure to the oil markets just as the world is shifting away from fossil fuels. The deal has raised eyebrows in the City, with some noting that the tieup would allow Tullow, which has lots of debt, access to Capricorn’s cash pile.