Genel Energy Turns Down DNO’s £202 Million Takeover Bid in Kurdistan Oil Sector
Genel Energy Rejects DNO’s Offer Amid Rising M&A Activity in Middle East Oil Sector
By Prerna Bedi and Anushka Chourasia
Genel Energy’s Response to DNO’s Takeover Bid
Aug 7 (Reuters) - Kurdistan-focused Genel Energy has rejected Norwegian oil firm DNO's £202 million ($271.8 million) takeover bid, it said on Friday, as it fundamentally undervalued the London-listed company.
Shares in Genel were up 22% at nearly 61 pence as of 1010 GMT, wiping out their year-to-date losses, but were still below DNO's proposed 69-pence-per-share cash bid.
Increasing Mergers and Acquisitions in the Middle East Oil Sector
Dealmaking Trends and Regional Context
Dealmaking among oil companies operating in the Middle East is gathering pace as a surge in oil prices since the onset of the Iran war in February has enabled some energy firms focused on the region to pursue mergers and acquisitions.
Separately on Friday, Israeli oil firm Ratio Petroleum raised its proposal to buy Egypt-focused Pharos Energy in a bidding war with Serica Energy.
Valuation Challenges for London-Listed Oil Producers
Market Discounts and Acquisition Opportunities
LONDON-LISTED PRODUCERS 'TRADING BELOW VALUE OF ASSETS'
A string of London-listed companies have been bought out in recent years as the FTSE 100 share index has traded at a discount to its global counterparts, particularly in the U.S.
Expert Commentary on Asset Valuations
"London-listed producers have traded below the value of their underlying assets for years, so acquirers can buy established, cash-generative production more cheaply than they could develop it themselves," said Aaron Bright, investment analyst at IG.
Details of DNO’s Bid and Genel’s Strategic Moves
Bid Structure and Regional Operations
DNO, operator of the Tawke field in Iraq's Kurdistan region in which Genel holds a quarter interest, made its bid on July 28 at a premium of 35% to Genel's close the previous day.
Oil firms operating in the Kurdish region have been struggling with multiple production and export suspensions due to geopolitical tensions in the region, prompting them to look at diversifying their footprint.
Genel’s Acquisition Plans and DNO’s Statement
Genel in July had agreed in principle to buy Egypt-focused Capricorn Energy in a $360 million all-cash deal, though other suitors are circling Capricorn.
"(DNO's proposal) provides certainty of value irrespective of the outcome of Genel's offer for Capricorn," the Norwegian group said in a statement disclosing its bid, which it said was not conditional on the outcome of Genel's Capricorn pursuit.
Financial Context and Reporting
($1 = 0.7433 pounds)
(Reporting by Prerna Bedi and Anushka Chourasia in Bengaluru; Editing by Harikrishnan Nair, Susan Fenton and Jan Harvey)
