Hostile bidders for UK oil firm are told to stump up £900m

HOSTILE bidders have ramped up their campaign to buy British North Sea oil firm Faroe Petroleum for £610million by tapping up shareholders and threatening to force themselves on to the board.

But one major shareholder in the AIM-listed company has told The Mail on Sunday he would not accept a bid from Norwegian oil firm DNO of less than £900million.

Battle lines were drawn last week when DNO, which is also Faroe’s largest shareholder, launched a 152p-a-share cash bid for the company in the first hostile takeover of an oil firm for years.

DNO, which has a 28 per cent stake, accused Faroe of failing to deliver for shareholders for 15 years.

Faroe’s board rejected the offer and accused DNO of trying to use the recent oil price fall, which had hit Faroe’s share price, to buy it ‘on the cheap’. That is despite the fact Faroe’s directors and staff would collect around £50million from a takeover, thanks to shares and other stock options.

Major Faroe shareholders have told The Mail on Sunday they have been contacted by representatives of DNO directly in an effort to win support for their bid. One said they had requested a meeting.

DNO’s offer document filed on Wednesday reveals it would ‘redouble efforts’ to win seats on the board if it is not successful in the takeover in an effort to improve ‘corporate governance practices’ at Faroe. It has openly criticised ‘very generous’ share option schemes for directors.

DNO gave up trying to get board representation in the summer as the war of words escalated between the two firms. Paul Mumford, of Cavendish Asset Management, a top 20 shareholder, said an asset swap deal with Equinor, announced just after DNO first revealed its plans for a bid, added £100million to its value. Mumford said he now valued Faroe at 225p per share, or £900 million.

The row is expected to rumble on for weeks. DNO could succeed on January 2, the first closing of the offer, if it gets support from investors holding more than 57.5 per cent of Faroe’s shares, including its own 28 per cent stake.

If not, DNO will have more time, but it could also walk away from the bid.

Faroe, whose partners include BP, is expected to post its formal response to DNO’s offer this week. •FRACKING firm Caudrilla has suspended operations at its site in Lancashire after recording a number of small earthquakes. The firm reported a ‘series of microseismic events’ at its Little Plumpton site, near Blackpool, after restarting drilling last week for the first time since October.