Faroe Board Accepts DNO Offer

The Faroe Petroleum board has told its shareholders it is accepting the DNO offer for its shares and advised them to do the same, in a statement January 9. It came soon after the Norwegian bidder's announcement that it had statutory control over the company with just over half the shares owned or promised it, following a higher bid price.

Faroe still maintains though that the price at £1.60/share, upped January 8 from £1.52/share, is not fair. It values the company at about £641.7mn ($817mn) for the fully diluted share capital of Faroe, including shares already held by DNO.

Faroe said DNO "has created considerable uncertainty for minority shareholders," in particular by stating that if it did have statutory control of Faroe, it may be required to combine DNO’s interest in its Norwegian operating subsidiary with Faroe’s Norwegian operating subsidiary. "DNO has also stated that, if the level of acceptances of its offer reaches 75%, it intends to take steps to delist the company which would significantly reduce the liquidity and marketability of Faroe’s shares. The inevitable board changes at Faroe mean there is no assurance that Faroe would continue to maintain its current corporate governance culture in line with UK corporate governance best practice, it said. 

As the final offer will become wholly unconditional, shareholders should accept it, "as Faroe directors intend to do in respect of their own beneficial holdings," it said. 

Faroe said it would work with DNO in the interim period to ensure an orderly transition of control "in the interests of all our stakeholders, including our shareholders and employees."