2nd UPDATE:Venture Admits Defeat And Recommends Centrica Bid
August 25 2009 - 9:50AM
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.
Centrica welcomed the Venture board's recommendation to accept
the takeover bid and said the offer will become unconditional
following the settlement Thursday of the purchase of Venture
shares, announced Aug. 21 and Aug. 24.
"We are pleased that the Venture board has recommended that its
shareholders accept our offer, in the event that it is declared
wholly unconditional," Centrica Chief Executive Sam Laidlaw
said.
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.
"The deal sees us continuing our investment in the North Sea
which is good news for our customers and shareholders. It further
reduces our overall exposure to volatile movements in wholesale gas
prices and helps secure U.K. energy supplies," Laidlaw added.
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.
Rothschild, Lambert Energy, Oriel and UBS Investment Bank are
acting as financial advisers for Venture on the deal.
Goldman Sachs International (GS), JP Morgan Cazenove and RBS
Corporate Finance Ltd and Hoare Govett Ltd are acting as financial
advisers for Centrica.
At 1407 GMT, Centrica shares were up 0.7% at 236 pence in a
weaker market. -By James Herron, Dow Jones Newswires; +44 (0)20
7842 9317; james.herron@dowjones.com (Selina Williams contributed
to this story.)
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