Emirates National Oil Company (Enoc) officially launched its offer to buy out minority shareholders in Dragon Oil at 750 pence a share yesterday.
The move, which confirms an offer price floated last month, starts the clock under Irish Stock Exchange rules. This means the minority shareholders have until July 30 to decide whether or not to accept.
Enoc already owns 53 per cent of Dragon Oil, whose main asset is an oilfield in Turkmenistan that reached a production rate last month of about 100,000 barrels per day.
Six years ago, Enoc failed in its first attempt to buy out minority shareholders.
Enoc now needs to convince holders of just over 23 per cent of Dragon Oil shares — or just over half the minority shareholders — to sell to delist the company from the Irish and London stock exchanges.
Failure to cross that threshold would mean it stays public and subject to Irish Stock Exchange rules.
Dragon Oil shares were quoted in London late in the UAE day yesterday at an all-time high of 733.50 pence.
The shares hit a low point this year was in mid-January at 469 pence.
The official offer values the entire company at about £3.7 billion (Dh21.26bn) and was up from an unofficial offer of 735 pence in May and an initial offer of 650 pence in early March, when the shares were trading at 509 pence.
The reaction from minority shareholders who have expressed an opinion has been mixed.
Henry Dixon, a fund manager at GLG, part of Man Group, which owns about 1 million Dragon Oil shares, or about 0.21 per cent of the company, came out in support yesterday.
“In our view, the shares have transitioned to fair value and we therefore think 750 pence represents a compelling price for all minority shareholders,” Mr Dixon said. “We support the recommendation communicated by the independent committee and the board of Dragon Oil, and their assessment that the offer is full and fair.”
The independent committee was set up this year by Dragon Oil and headed by an independent outside oil executive, Thor Haugnaess, to review Enoc’s offer.
Dragon Oil’s largest minority shareholder, the Edinburgh-based fund management group Baillie Gifford has opposed the offer, which it says “materially undervalues” the company. Baillie Gifford owns about 35 million shares — a little more than 7 per cent of Dragon Oil.
The emerging markets analyst Richard Sneller said Dragon Oil has the potential to double production over the next 10 years, which would make it one of the fastest-growing listed oil companies in the world.
Enoc disputes that assessment of the Cheleken field in Turkmenistan.
Other large minority shareholders, which include Dublin-based Setanta Asset Management and Franklin Resources, have so far declined to comment on the offer.
amcauley@thenational.ae
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