Korea National Oil Makes a Hostile Takeover Bid for UK Explorer Dana Petroleum Plc

From: Investinuk
Published: Sat Aug 21 2010

After its original bid was rejected, Korean state owned oil explorer, Korea National Oil made a hostile bid pegged at £1.87 billion for Dana Petroleum, the UK based oil explorer. In a statement from the Korean firm, it reported that it had made an offer of 1,800 pence per share and the purchase of Dana’s convertible bonds.

In addition, the firm said it got letters of support from Dana’s shareholders, about 49% of Dana’s stock. The Korean company plans to spend $6 billion in acquisition investments this year in a bid to double its production output by the year 2012. Korea National Oil is Asia’s fourth largest importer of oil and its rivals include China and India. The UK oil explorer, Dana Petroleum, is involved in operations in the North Sea and Africa. In March this year, Dana reported that its reserves went up by 15% to 223 million barrels of oil equivalent in 2009. Analysts have termed the second hostile bid as fair, given Dana’s reserves and daily output figures. The UK investment deal comes as the second mega acquisition investment the Korean firm has undertaken since October last year.

The deal places Dana’s value at $12 a barrel of oil equivalent, or an average of $10 and $13 a barrel, said analysts. The fresh offer is 6.2% premium over Dana’s closing price as at Thursday on the London Bourse. Analysts further believe that the level of commitment shown by Dana’s shareholders may result in a signing for the deal. On the 12th of this month, Dana’s shares fell by 13% when it turned down the first offer from Korea National Oil. In a statement, Korea National Oil said its 1,800 pence per share offer fully and fairly reflects all of Dana’s recently announced and ongoing developments, coupled with its exploration potential.

The Korean firm increased its indicative proposal from 1,700 pence on 23rd July. Bank of America Corp.’s Merrill Lynch & Co. unit is the financial advisor to Korea National. Dana holds more than 100 interests in exploration and production licenses in nine countries and pumps oil and gas from 37 fields. Dana Petroleum plc is a leading British independent oil company. Dana's license portfolio across Europe and Africa provides a strong and balanced asset base underpinned by healthy cash reserves.

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