Emirates National Oil Company (Enoc) may extend its buyout offer for Dragon Oil, which is set to expire on Thursday, after having failed to garner sufficient support from minority shareholders, sources say.
Enoc more than six weeks ago made its offer of 750 pence a share for about 46 per cent of Dragon Oil it does not already own. The offer expires on Thursday at 3pm (Ireland time) in Dublin, where the shares have their primary listing.
Under Irish Stock Exchange takeover rules, a majority of Dragon Oil’s minority shareholders – or slightly more than 23 per cent of voting shares – must vote to accept Enoc’s offer to be able to proceed with plans to delist Dragon Oil and privatise it.
“At this point, it looks like the offer will be extended,” said a person familiar with the deal.
If Enoc extends its takeover offer, it then has 39 days to revise the offer and a total of 60 days until the final offer expires, subject to Irish regulators’ approval.
Several of Dragon Oil’s largest minority shareholders – representing a total equity of about 16 per cent – have said the 750 pence offer was inadequate.
The Edinburgh-based fund manager Baillie Gifford was first to voice its concerns soon after the offer was made in the middle of last month. It had previously led the effort in 2009 that blocked an earlier Enoc offer to acquire Dragon Oil.
Baillie Gifford was joined by Setanta Asset Management in publicly opposing the offer, and later by Elliott Advisors, part of the New York-based hedge fund billionaire Paul Singer’s group, which built up a stake of more than 5 per cent this month.
The investors argue that Enoc is deliberately understating the potential of Dragon Oil’s main asset – the Cheleken oil and gasfield off the shores of Turkmenistan – as well as other prospects.
Baillie Gifford has suggested that Enoc add a contingency payment to reflect Cheleken’s upside potential.
“Regarding the prospect of a sweetener, I think that depends on the level of acceptances received,” said Gerry Hennigan, an analyst who follows Dragon Oil for Goodbody Stockbrokers in Dublin.
“If it falls short, probably it will be in everyone’s interests to tease out [a higher offer],” said Mr Hennigan, who recently valued Dragon Oil shares at 807 pence a share.
Dragon Oil shares were trading at 720.50 pence on Wednesday, down 1.5 pence.
Follow The National’s Business section on Twitter