This morning as expected ENOC upped their offer for Dragon Oil (LSE:DGO) to 750p per share. This represents a 15p increase on their proposed offer and that would seem enough to gain the boards approval. This bid comes in 100p below the 850p value I believe Dragon is currently worth.
ENOC state that they ‘met with a number of shareholders in order to give them the opportunity to provide feedback’ and as a result of discussions they upped the bid to 750p. This to me signals that this 750p offer will go through as they will have spoken to the big shareholders and taken their advice on board.
They only need 50% acceptance from the rest of the shareholders (23% of full shareholding) and I would expect them to reach this rate. According to Irish takeover rules ENOC needs 77% for delisting and control of Dragon.
I still believe shareholders are being shortchanged and should be holding out for a bid of above 800p. In todays RNS it states that on the 9th June Dragon reached their target and produced 100,658 barrels of oil. This will be plateaued for 5 years and they are looking at techniques to modestly increase this plateau with enhanced recovery techniques. There are also two appraisal wells planned in Iraq for Q2 of 2015 could be huge price catalysts if successful.
750p is not a fair price and shareholders should be voting no in hope of a higher offer.
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