FOR an industry that was supposedly on its last legs a few years ago, Scotland’s oil and gas sector looks to be in rude good health following a stunning £600 million bid for Aberdeen-based Faroe Petroleum.
Shares in Faroe soared more than 25% higher yesterday after Norwegian firm DNO, the company’s largest shareholder – it owns more than 28% of Faroe – said it was offering a “considerable premium” at a time of an uncertain oil market.
The offer of £1.52 per share represented a premium of 20.8% on Faroe’s closing price of £1.25 in London on Friday.
DNO’s executive chairman Bijan Mossavar-Rahmani said his company would retain the “skills, knowledge and expertise” of Faroe’s employees.
He said: “We intend to retain Faroe’s Aberdeen head office and each of the other offices.”
Faroe released a statement yesterday afternoon: “Further to its earlier announcement, the Board of Faroe have now met together with its advisers and considered the announcement released earlier today by DNO of an unsolicited offer for the entire issued and to be issued share capital of Faroe not already owned by DNO at 152p per share.
“The Board strongly believes that the offer is opportunistic and substantially undervalues Faroe and encourages all shareholders to take no action.”
The statement added that the offer is “substantially below the average premium on all UK takeovers over the last 10 years of 43%” and is “substantially below the average premium on all UK takeovers in the E&P space over the last 10 years of 40%".
John Bentley, non-executive chairman at Faroe, said: “DNO’s offer substantially undervalues Faroe on every applicable metric.
“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 £1.52 per share and we urge shareholders to reject DNO’s opportunistic, unsolicited and inadequate offer.”
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