Cap urged on oil bid: Enterprise told not to raise price for Lasmo as deadline looms
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.ENTERPRISE Oil is coming under intense pressure from institutional shareholders not to raise its pounds 1.3bn takeover bid for Lasmo, the oil and gas explorer.
This stance, adopted by a significant number of City investors, could seriously hamper Enterprise's takeover as the increasingly bitter battle reaches its first closing date on Tuesday.
The value of the all-paper bid has dropped sharply since it was launched almost a month ago. Based on Enterprise's closing price of 398p last Friday, it values Lasmo at about 132p a share, against the target's market price of 148p.
However, many of Enterprise's own institutional investors are opposed to sweetening the terms because of doubts over the merits of the deal.
One said: 'We remain to be convinced about the industrial logic of the takeover. What concerns us most is that Enterprise should not overpay.
'We feel that the current offer is high enough and it is difficult to see how it could fund a cash element. That is the majority view among many institutional shareholders.'
However, others believe that it could receive strong backing with an fully underwritten cash and share offer, or a convertible share issue.
Although Graham Hearne, Enterprise's chairman and chief executive, won overwhelming support for the bid at a crucial shareholders' meeting last week, in private he is understood to have come under tough questioning from City investors over his belief that size is an important factor in the oil industry.
Mr Hearne has said publicly that the takeover would give Enterprise bigger international clout in its attempts to compete with oil giants such as Shell, Exxon and Mobil.
'You need size and scale to make meaningful and lasting progress,' he said when the bid was launched. ''This is a big boys' game and Lasmo will give us the next step we need.'
But his remarks appear to have backfired. Rudolf Agnew, Lasmo's chairman, has used them to criticise Enterprise's bid.
Lasmo, however, is still far from winning the fight to remain independent. Its share price reflects market expectations of an improved offer from Enterprise, or of a higher bid from a rival suitor, possibly British Gas, Mobil or Amerada Hess.
Andrew Shilston, Enterprise's finance director, said: 'We have said to our shareholders many times that we will not overpay.'
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments