Dragon Oil’s shares soar as firm accepts takeover offer

Shares in Dublin-listed exploration firm Dragon Oil hit a record high, yesterday, as the company agreed to improved takeover terms tabled by its majority shareholder.

The Emirates National Oil Company (ENOC) yesterday announced that an improved bid of £7.50 per share for the 46% of Dragon it does not already own had been accepted by Dragon’s independent committee in charge of considering the proposal.

The renewed offer values Dragon at £3.7bn (€5.1bn) and marks an improvement on the £7.35 per share/£3.6bn proposal put forward last month. It values those parts of the company not currently controlled by ENOC at £1.7bn.

Dragon’s shares jumped by almost 10% to just over €10 and by 8.2% to 725p in Dublin and London respectively as a result. Unlike a previous attempt to buy the company five years ago, ENOC now only needs 23% acceptance from Dragon’s minority shareholding to trigger the Dubai-based company’s delisting from the Irish and London stock exchanges.

ENOC said yesterday that it improved its offer after receiving feedback from a number of Dragon shareholders. It also reiterated its previous claim that Dragon’s production is now close to plateauing amidst “an uncertain market backdrop”.

Thor Haugnaess, chairman of Dragon’s independent committee, said the deal offers Dragon’s minority shareholders the opportunity to exit at an attractive price.

Most analysts agreed, with the offer price representing a 47% premium over Dragon’s closing price on March 13 (the date of ENOC’s first recent approach) and a 12% premium to last Friday’s closing price.

“Our view is that that offer price represents a fair value for the company and crystallises the inherent value of the company’s current production capabilities in addition to strong balance sheet, both of which have been features of the attractive investment case for Dragon Oil for several years,” said David Holohan, head of research at Merrion Stockbrokers.

Merrion suggested at the time of the 735p per share offer, however, that minority investors should hold out for something closer to 805p/£3.95bn.