KEY POINTS
- Genel raises its Capricorn bid to $436 million.
- Capricorn’s board switches support back to Genel.
- DNO has yet to say if it will make a higher offer.
Genel Energy has increased its cash offer for Capricorn Energy to $436 million, outbidding Norway’s DNO and regaining the support of Capricorn’s board in a closely contested takeover battle.
Genel increased its offer on Friday, September 25, after DNO raised the stakes earlier this month with a $396 million proposal for the UK-listed oil and gas company.
The latest move represents a significant increase from Genel’s previous $360 million offer, which secured Capricorn’s board recommendation in July.
Under the revised terms, Capricorn shareholders will receive approximately $5.74 per share. The consideration comprises $4.75 in cash and a special dividend of $0.99 per share.
Genel said the revised proposal represents about a 10% premium to DNO’s offer, strengthening its position in the bidding contest.
Capricorn board backs Genel again
Capricorn’s board has withdrawn its previous recommendation for DNO’s offer and returned its support to Genel’s revised proposal.
The board said Genel’s offer provides shareholders with “superior value, certainty and deliverability”, making it the preferred proposal following the latest increase.
The decision comes after several weeks of competing bids for Capricorn, which has emerged as an attractive takeover target because of its upstream oil and gas assets in Egypt.
Investors responded positively to the latest development, sending Capricorn’s shares sharply higher.
Capricorn shares climbed 12.2% to 443 pence by 08:38 GMT on Friday, their highest level in more than 15 years. Genel’s shares, however, fell 2.1% following the announcement.
The strong rise in Capricorn’s share price reflects expectations among investors that the bidding contest could result in greater value for shareholders.
Capricorn has attracted competing interest because of its production and exploration interests in Egypt’s Western Desert, a key oil and gas-producing region.
For Genel, acquiring Capricorn would expand and diversify its production base while increasing its exposure to Egypt’s upstream sector.
Zeus Capital analyst Daniel Slater said the acquisition would provide Genel with a more diversified production portfolio, a larger drilling programme and additional sources of cash flow.
The deal would therefore give Genel an opportunity to broaden its operational footprint while adding potentially significant production and investment opportunities to its existing portfolio.
