OSLO: DNO ASA, the Norwegian oil and gas operator, announced Friday that it has approached the board of Genel Energy plc with a non-binding cash offer valuing the London-listed explorer at approximately £202 million, with an alternative cash-and-stock option also on the table.
The indicative proposal, made through DNO’s wholly owned subsidiary DNO Iraq AS on July 28, offers Genel shareholders 69 pence in cash per share, representing a 38% premium to the company’s closing price on Aug. 6, the last trading day before the announcement. The offer also marks a 30% premium to Genel’s volume-weighted average closing share price over the three months ended on that date.
Under the Alternative Offer, shareholders may elect to receive a combination of cash and newly issued DNO ordinary shares equivalent in value to the cash bid. DNO said it expects any new shares would be issued under existing authorities from its annual general meeting, meaning a firm offer would not require DNO shareholder approval.
DNO characterized the proposal as a “compelling proposition,” citing a substantial premium that reflects full value for Genel’s assets despite ongoing uncertainty over its sole revenue-generating asset. The Norwegian firm also noted that the offer provides certainty regardless of the outcome of Genel’s separate bid for Capricorn Energy plc, announced July 2, which DNO said would leave Genel without long-sought diversification and with a disproportionate administrative burden if unsuccessful. Several third parties have announced possible offers for Capricorn, and DNO emphasized there is no certainty Genel’s bid will succeed.
The proposal is not conditional on the completion or lapse of Genel’s Capricorn offer, DNO said, offering a high degree of deal certainty. It also presents a liquidity event for Genel shareholders, DNO added, against a backdrop of poor trading liquidity in Genel shares.
For shareholders who elect for DNO shares, the company said they would gain immediate participation in a diversified, growth-oriented business with an established dividend track record. DNO also argued the combination would create a stronger entity in the Kurdistan Region of Iraq, where scale and financial robustness are essential given continuing security and commercial risks.
The Genel Board rejected the approach on Aug. 4, according to DNO, which said it remains willing to engage with the board regarding the proposal.
The indicative offer is non-binding and subject to customary pre-conditions, including completion of due diligence to DNO’s satisfaction. DNO reserved the right to waive any pre-conditions in whole or in part. The company cautioned there can be no certainty that any formal offer for Genel will be made, and said a further announcement would be issued if and when appropriate.
