UPDATE: Venture Admits Defeat And Recommends Centrica Bid
August 25 2009 - 7:13AM
Dow Jones News
U.K. oil and gas producer Venture Production PLC (VPC.LN)
admitted defeat in its defense against a hostile GBP1.3 billion
takeover bid from utility Centrica PLC (CNA.LN) and recommended
that all shareholders accept the offer.
Major Venture shareholders Larry Kinch and ArcLight Capital
Partners, who previously said Centrica's offer was too low, have
decided to sell their combined 19.2 million shares, equivalent to
12.8% of Venture's share capital, the company said.
Centrica already either owns, has acquired subject to settlement
or has received valid acceptances equivalent to 58.7% of Venture
shares, Centrica said Monday evening.
"The board of Venture continues to believe that Centrica's final
offer substantially undervalues Venture. However, the board
recognizes that, in the event that the offer is declared wholly
unconditional, Centrica will have control of Venture," and any
shareholders who do not sell run the risk of holding a minority
stake in a de-listed company, said Venture in a statement.
Venture's statement represents a significant step forward for
Centrica, which has long been on the hunt for gas resources to make
up for its declining reserve base. Venture's management strongly
resisted Centrica's offer of 845 pence per share, which it said
substantially undervalued the company because of its growing output
and a strong financial position.
However, Centrica's management seem to have judged correctly
that the current economic climate was ripe for a bargain.
"Centrica's hostile bid success seems to have been all about
timing - taking advantage of cash-strapped fund managers who prefer
the cash in the hand today versus promises for the future,
especially when Venture's track record for delivery has not been
unblemished," said a research note from Evolution Securities.
"(Venture Chief Executive) Mike Wagstaff will not go away
empty-handed," said Evolution.
Wagstaff's 1.5% stake in Venture is worth around GBP20 million
at Centrica's bid price.
Wagstaff can be safe in the knowledge that he will be in demand,
as someone who can deliver cash returns in a sector preciously
short of talent, Evolution said.
At 1030 GMT, Centrica shares were down 0.4%, or 1 penny, at 234
pence in a weaker market.
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317;
james.herron@dowjones.com
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