LONDON (Alliance News) - North Sea-focused oil & gas firm Faroe Petroleum PLC on Monday faced a hostile takeover bid from major shareholder DNO ASA, as the Norwegian firm made a GBP608 million offer directly to fellow investors.
Just after the market close, Faroe said it "strongly believes" the offer is "opportunistic" and "substantially undervalues" the company. The firm encouraged shareholders to take no action.
Shares in Faroe closed up 27% at 159.60 pence each.
DNO - which already has a 28% stake in Faroe - has made a 152 pence per share cash takeover offer, valuing Faroe at GBP607.9 million.
The offer price represents at 45% premium to the 105 pence share price before its initial share purchase in April and 21% higher than Faroe's 125.8 pence share price at the close on Friday.
In response to the takeover bid, Faroe Petroleum said the Norwegian firm did not engage with the company before announcing its offer.
But on Monday DNO described itself as "deeply disappointed", after Faroe "summarily rebuffed" its "reasonable request last summer for board representation and constructive engagement". Since then, its stake has been diluted by share awards to directors.
"DNO has both publicly and privately raised its concerns about the corporate governance culture and shareholder value strategies at Faroe, but to no apparent avail in terms of substantive and timely actions," DNO added in a statement. "Against this backdrop, DNO has now decided proactively to address these concerns and protect its sizeable investment in Faroe by offering to acquire all the outstanding shares in Faroe that DNO does not already own."
