LONDON (Alliance News) - Faroe Petroleum PLC investor Cavendish Asset Management Ltd said Wednesday DNO ASA's offer for the UK oil producer is "unacceptable" and has sold its stake in Faroe.
Earlier Wednesday, Faroe told shareholders to accept Norway's DNO's latest offer, given it is set to become unconditional, despite not believing it represents a fair amount.
Late Tuesday, DNO upped its 152 pence offer to 160p, making the new offer valued at GBP641.7 million.
Faroe shares were 4.2% higher on Wednesday at 160p.
Cavendish said the offer was "unacceptable". The asset manager said the offer is "well below" its expectations, with the minimum independent value of Faroe at 186p. Cavendish said it no longer wants to be a minority shareholder in Faroe "due to the different management approach of DNO".
As a result, Cavendish has divested its entire holding in Faroe. Cavendish's stake in Faroe was not disclosed.
Earlier Wednesday, DNO announced it had bought 8.7% more of Faroe, taking its stake to 39.3%. Given 13% of shareholders had accepted the old deal, this took the combined holding and acceptances to 52%, above the 50% threshold.
This would make DNO's offer unconditional and also would give DNO effective control of Faroe. If acceptances reach 75%, DNO plans to de-list Faroe.
Faroe said: "The board considers that, following its initial investment in Faroe and in the conduct of its subsequent offer, DNO has created considerable uncertainty for minority shareholders."
"In particular, DNO has stated, should it acquire statutory control of Faroe, it may be required to combine DNO's interest in its Norwegian operating subsidiary with Faroe's Norwegian operating subsidiary. DNO has also stated if the level of acceptances of its offer reaches 75% it intends to take steps to delist the company which would significantly reduce the liquidity and marketability of Faroe's shares," it continued.
"The board also notes DNO has indicated it expects to make changes to the Faroe board, and the board therefore considers there to be no assurance Faroe would continue to maintain its current corporate governance culture in line with UK corporate governance best practice."
