Hardball at Dragon Oil squeezes knockout bid

Everyone knows that Emirates National Oil Company Limited (ENOC) has deep pockets. It's why the energy company has had to raise its bid for Dragon Oil for a third time to win over stubborn shareholders.

Five months after the takeover process began at 650p, ENOC, which already owned over half of Dragon Oil, has offered 800p. That's clearly the result of tough negotiating by Dragon's next largest shareholders - Baillie Gifford and Elliott Capital Advisors - who were unimpressed by previous offers of 735p then 750p in June.

Baillie Gifford's Richard Sneller said the deal "represents an attractive exit price", while Elliott encouraged other shareholders to accept the offer. And getting these two on side was crucial given their 13.1% blocking stake.

(click to enlarge)

And this does indeed look like a good deal for all parties.

Just eight months ago Dragon Oil shares were trading at less than 450p following the collapse in oil prices which began last summer. The takeout price is a record for Dragon shares, which prior to ENOC's interest in the spring had struggled to break above 650p.

In March, ENOC owned 53.9% of Dragon. Now, with 15.5% of shareholders having accepted the previous deal and another 1.32% intending to accept, the extra 13.1% from Baillie and Elliott mean the offer has been declared unconditional in all respects. Dragon shares will soon be delisted.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.