British and Scottish Gas parent Centrica will this week attempt to win over more major shareholders of Venture Production to its hostile £1.3billion cash takeover bid for the oil and gas operator which has its HQ in Aberdeen.
The firm’s unsolicited offer for Venture, made just before a takeover panel “put up or shut up” deadline today was rejected by the company’s management late on Friday evening as “substantially undervaluing” the business.
Centrica, which first took a stake in Venture in March, has since upped its holding to 29% since it acquired private equity firm 3i’s 5.4% share.
It will now seek to win over other major shareholders including Legal & General, which owns 4.3% of Venture, Axa, which holds 3.4%, and JP Morgan, 3.3%.
Centrica wants to buy the company to boost its gas production and reduce its dependence on volatile wholesale markets.
The firm can currently produce around 35% of its energy needs from its own resources, although this should increase to 45% when it completes the acquisition of a 20% stake in nuclear power firm British Energy from French energy giant EDF.
Buying Venture would mean that Centrica could supply 60% of its energy from its own assets and resources.
Centrica said the deal, at a 87% premium to Venture’s share price in January, offered “compelling” value for the firm’s shareholders and would protect them from the possible impact of falling gas prices. Around 70% of Venture’s reserves are gas.
Venture’s chief executive Mike Wagstaff called Centrica’s approach “opportunistic”.
He said: “We are the leading independent gas producer in the North Sea.
“In no way does this offer recognise the strategic position and high quality of our UK gas reserves and resources.
“Our strong financial position enables us to exploit both our existing portfolio and future acquisition opportunities.”
He added that Centrica had said its offer of 845p a share was final and would not be increased, although it reserved the right to revise or increase its offer should a rival bidder emerge.
Mr Wagstaff also said that after discussions with large shareholders he believed many were looking for an offer significantly above 900p a share. Venture’s shares closed at 785p on Friday.
Venture is an exploration and production company which acquires, develops and brings into production discovered but undeveloped oil and gas fields in the North Sea.
It produced almost 53,000 barrels of oil equivalent per day during the first six months of this year, reporting an “excellent first half across all areas of its business”.
In 2008, the firm virtually doubled operating profits to £231million with revenues up 38% to £494.9million, thanks to higher production levels and commodity prices.
If Centrica does not gain control of Venture, takeover panel rules state that it will not be able to make another offer for the company within 12 months without its consent.
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