Stakes raised in pursuit of North Sea oil company
THE battle for North Sea oil company Faroe Petroleum intensified last night, as hostile bidder DNO raised its offer by £34m.
Investors will now get 160p per share if they accept DNO’s bid, which values Londonlisted Faroe at £641.7m.
Faroe’s management had not commented on the hike yesterday evening, but have slammed the previous offer as undervaluing their company.
Norwegian predator DNO already controls 43.8pc of Faroe’s shares, partly through a stake it has gradually built in the company and partly from investors holding 13.1pc of Faroe who have accepted its offer.
It wants to reach 50pc, since at this point it will be easier to take over the whole company.
All big investors will be likely to cash in their shares, to avoid being left with a tiny stake that is hard to trade and falls in value.
DNO’s original bid, of 152p per share, failed to win enough support from shareholders last week, so it has upped its offer.
Bijan Mossavar-Rahmani, DNO’s executive chairman, said: ‘DNO does not overpay for assets. But we have listened to the market and believe it is in the interests of all parties, save perhaps for a handful of Faroe directors, to close off this process by increasing our offer price to an even more generous level, and announcing a final closing date.’
Faroe’s directors, management and employees are due to pocket £53m between them if the final offer is pushed through.
But they have condemned the deal which will see Faroe amalgamated with DNO, and released an independent report last week that put its value at as much as £850m. Faroe’s shares ended the day down 0.9pc, or 1.4p, at 153.6p.
DNO only published its increased offer after the market closed, meaning that it was not reflected in the shares.
Just months after investors worried that Vodafone could cut its dividend in November’s half-year results, the payout has come under pressure again.
Analysts at RBC Capital Markets have called the dividend, which costs Vodafone £3.7bn per year at current levels, ‘unsustainable’.
The team at RBC, headed by Wilton Fry, said the mobile communications giant has ‘insufficient financial headroom’ given the issues it is facing.
These include the rising licence fees it pays to the Government to use certain signal bandwidths for its network, increased competition and a possible slowdown in customer spending.
Fry advised investors to cut their
stakes, and lowered his recommended target price for the shares to 125p. They duly slid 1.1pc, or 1.8p, to 155.6p.
The souring sentiment at Vodafone was countered by the increasing interest in the paper packaging companies DS Smith and Smurfit Kappa.
Both were boosted by data showing stronger grocery sales figures over the critical Christmas period. Smurfit shot up 6.2pc, or 128p, to 2208p, while DS Smith climbed by 5.9pc, or 18p, to 324p.
One of Britain’s oldest video games studios, Codemasters, surged 11.8pc, or 19p, to 180.5p after it signed a deal with a Chinese internet giant.
The agreement to jointly develop mobile games with Netease will net the AIM-listed firm at least £6.3m over the next three years.
Warwickshire-based Codemasters, which is behind the Formula One and Dirt Rally games, upgraded its earnings predictions on the back of the deal, saying it would bag £3m in the current financial year.