Faroe to Fight off Hostile Bid

Faroe Petroleum is fighting off a hostile bid at £1.52 ($1.95)/share from 28% shareholder Norwegian DNO, it said November 26. At time of press (10am GMT), however, its shares had risen above that and were trading at £1.57. At the present bid price DNO would pay £402.6mn for all the outstanding shares.

Faroe said DNO had not engaged with Faroe before making the announcement of its unilateral offer and that the Faroe board would make a further announcement will be made in due course. "In the meantime, Faroe shareholders are strongly urged to take no action in relation to their Faroe shares," it said.

DNO CEO Bijan Mossavar-Rahmani said: "In the period between our first acquisition, triggering significant bid speculation, and this offer, the price of Brent crude has dropped 13% and oil and equity markets have entered a period of great uncertainty. For those shareholders who wish to exit, DNO is therefore offering a considerable premium."

Faroe said in August an attempt by DNO to secure two seats on Faroe's board smacked of trying to "gain control of Faroe's business without making an offer to all shareholders at an appropriate premium."

Analyst Malcolm Graham-Wood has now said "The recent fall in the oil price and oil sector shares has fallen into [DNO's] hands. As such it can be described as an opportunistic and derisory offer which shareholders should have little difficulty dispatching. Having said that, with 28.2% of the company they do have a head start and Faroe are going to have to polish up that defence document and get on the road. They have an impressive list of shareholders to whom they must get the message across. That message is one of being pretty much the best explorer in the sector over the longer term and with a really exceptional asset portfolio in all areas of exploration, appraisal, development and production."