Dragon Oil bid fires up investors

Oil and gas player Dragon Oil (DGO) saw its shares soar on Monday morning, after announcing that majority shareholder Emirates National Oil Company (ENOC) has made a formal offer to acquire it.
 
The Dubai state-controlled company will purchase the final 48% of Dragon Oil that it does not already own in a deal that values the London-listed company at £2.36 billion, five months after it first made its intentions known.
 
ENOC first approached the Turkmenistan-focused company on 3 June and said at the time that it was considering an offer that would "represent a modest premium to Dragon Oil's closing share price."
 
The 455p offered today for each share was at a premium of almost 35% to the company's price back in June and 65% higher than the average daily closing price of around 276p per share over the last 30 trading days.

Why not take a minute to check out iBall TV's alternative view of Dragon Oil.
 
The Independent Committee of Dragon Oil urged shareholders to vote in favour of the proposal. Nigel McCue, chairman of the Independent Committee of Dragon Oil, commented: "We believe this represents an attractive outcome and a fair and reasonable offer for the minority shareholders in the company."
 
ENOC, in turn, said the move supported its strategy of growing its activities in the Middle East and Turkmenistan and would enhance its existing reserves and production base. Furthermore, the deal marks an important milestone in ENOC's plan to become a major integrated oil and gas company.
 
Saeed Khoory, ENOC group chief executive said: "ENOC is delighted to have agreed to fully acquire Dragon Oil. This acquisition is an exciting development for ENOC and represents a major step in ENOC's strategy of building a vertically integrated oil & gas group with a strong upstream position.

"Dragon Oil's assets will significantly enhance ENOC's reserves and production. By achieving full control of Dragon Oil, ENOC will be able to achieve greater operational flexibility to progress the development of the assets further."

News of the offer caused a furore among investors discussing the offer on the Interactive Investor Dragon Oil discussion board.
 
Afrenman commented: "I have held and closely followed this share for a couple of years now and consider this so called 'buyout' to be blatant daylight robbery. I hope most people vote against it." This sentiment was backed up by fellow investor arddthax who dubbed the whole event "an ill-judged opportunistic bid."
 
Tullowtosell also blasted the offer: "The business is worth much more than this - so they won't be getting my shares unless a realistic offer is made."
 
Following the news, Dragon's share price rose almost 9% to 446.50p.