Dana shareholders back KNOC bid

By Kim Da-ye

The Korea National Oil Corporation’s (KNOC) bid for Dana Petroleum has gained the support of shareholders who account for over 50 percent of the British oil firm’s stocks, an official said Monday.

Passing the 50-percent threshold is expected to boost KNOC’s efforts to take Dana private through a tender offer, company officials said with a hint of caution.

“The figure is easily over 50 percent. We are comfortably progressing with the takeover bid,” said a KNOC official, though he wouldn’t disclose the exact number.

The recent progress was also acknowledged by Knowledge Economy Vice Minister Park Young-june who told reporters on Sept. 7, “I received a report that everything is going smoothly.”

As of Aug. 20 when the state-run firm announced an offer of 18 pounds per share or a total of 1.86 billion pounds (3.2 trillion won) for the takeover, those supporting the bid held about 48.6 percent of Dana’s shares.

Shareholders have been selling and buying stocks since, but the number supporting the takeover is now safely above 50 percent. Dana shareholders will decide by Sept. 23 if they will accept the offer.

If KNOC owns more than half of Dana’s shares, it will have a controlling interest in the company and a majority of the vote regarding major decisions.

KNOC mapped out its plan for the full acquisition of Dana when it made a cash offer on Aug. 20. If KNOC wins over shareholders owning 75 percent or more of Dana, it will cancel the company’s listing. “De-listing is likely to reduce significantly the liquidity and marketability of any Dana shares,” said KNOC in the cash offer document.

If the Korean firm owns more than 90 percent of Dana’s shares, it can compulsorily acquire the remaining shares on the same terms as those of the share offer.

Things are seemingly going well for KNOC as the British oil company’s 541-page defense paper ― an independent expert’s asset valuation ― is considered to have failed to impress shareholders and attract any other contenders so far.

Dana Petroleum Chief Executive Officer Tom Cross said in a statement released on Sept. 8, “During 2010, Dana is on course to nearly double production to 70,000 barrels per day and grow its reserve base significantly. This is transformational growth by any measure, and KNOC's bid, based on incomplete information, is simply not reflective of the true value of the company.”

Dana insists that the stock value should be between 22.7 pounds and 24.65 pounds per share.

KNOC responded the following day that its offer is “full and final and will not be increased save that KNOC reserves its right to increase the share offer if a competitive situation arises.”

It hired global reserve auditor RPS Energy that said Dana’s production, development and exploration assets are “fully incorporated” into the offer. The 18-pounds-a-share offer represents a 59-percent premium on Dana’s closing share price of 11.35 pounds on June 30, the day before the bid was announced.

Meanwhile, the state-run company is also planning to issue foreign-currency bonds to raise between $500 million to $1 billion for acquisitions and exploration projects, possible for the financing of its Dana bid, according to Yonhap News.