UPDATE: Centrica Passes 50% Mark In Venture Battle

Centrica PLC (CNA.LN) moved a step closer to taking over U.K. oil and gas producer Venture Production PLC, saying Monday it either owned or had acceptances for 50.3% of Venture's share capital.

Centrica, which received European Commission clearance for the deal on Friday, is looking to the Venture acquisition to help shore up its gas supplies and strengthen its position in the U.K. energy market. The move is opposed by Venture's board.

Securing gas and electricity supplies for its 15.5 million-strong customer base has long been an issue for Centrica, which faces dwindling reserves. But with volatile energy markets making energy security a top priority for governments and companies alike, the issue has become even more pressing for Centrica.

At the end of last year, Centrica supplied around a third of its gas requirements from its own gas fields and over half of its electricity sales from its own generation facilities - the rest is purchased in volatile wholesale markets.

Centrica, which launched its bid last month, said it had so far Monday morning acquired, subject to settlement, further shares representing approximately 8.4% of the existing issued share capital of Venture, at 845 pence a share.

Taking the acceptance level at 1600 GMT on Aug. 21 of 41.9% and Centrica's holding in Venture at the time of its Monday announcement, Centrica either owns, has acquired subject to settlement, or has received valid acceptances of its offer, shares representing around 50.3% of the existing issued share capital of Venture, the company said in a statement.

Centrica, which said it expects the settlement of these purchases will take place on Aug. 27, will declare the offer wholly unconditional when it passes the 50% mark.

A spokesman from Venture declined to comment.

Venture's management has been trying to fend off Centrica's GBP1.3 billion hostile takeover bid, saying the 845-pence-a-share offer substantially undervalues the company and its long-term growth prospects.

Centrica was formed in 1997, when state monopoly British Gas PLC was split into Centrica and what was later to become BG Group PLC. The demerger left Centrica with the gas production business of the now-declining Morecambe gas fields in the East Irish Sea, while BG Group was left with the North Sea gas fields.

For several years, Centrica pursued a strategy of diversification, buying a range of companies away from its core business of supplying gas and electricity.

But since the 2006 appointment of Sam Laidlaw as Chief Executive, Centrica has been buying up exploration acreage in Norway, Nigeria and the Caribbean. Earlier this year, it boosted its electricity resources by buying 20% of the U.K.'s largest nuclear power generator, British Energy, from Electricite de France SA (EDF.FR).

At 1246 GMT, Centrica shares were up 2.6% at 234 pence, down from an earlier 3% increase to 237 pence. Shares in Venture were up 0.1% at 844 pence.

Goldman Sachs International (GS), JP Morgan Cazenove and RBS Corporate Finance Ltd and Hoare Govett Ltd are acting as financial advisers for Centrica on the proposed deal.

Company Web site: http://www.centrica.co.uk

-By Selina Williams, Dow Jones Newswires +44 207 842 9262; selina.williams@dowjones.com

(James Herron contributed to this story.)

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