ENOC fails to get support for its bid to buy out Dragon Oil

EMIRATES NATIONAL Oil Company’s (ENOC) bid to buy out Dragon Oil will not go ahead after its €2.6 billion offer failed to win enough support yesterday.

ENOC owns 52 per cent of the Dublin- and London-listed oil production and exploration company. Last month it offered 455 pence sterling for the remaining 48 per cent, valuing the company at €2.6 billion.

It needed the support of 75 per cent by value of the other shareholders in order to buy out their shares and turn the company into a subsidiary.

Dragon held an extraordinary general meeting (egm) yesterday, but more than half the shareholders by value voted against the motion, a result which means that the sale of the rest of the company to ENOC will not go through.

A statement issued after the meeting shows that shareholders controlling 73 million shares voted against the offer, while shareholders controlling 70 million were in favour.

ENOC recently said the offer was final and it would not increase it. However, it did say that should its bid fail, it would remain as a majority shareholder in the company until the end of 2011.

While the board recommended the offer last month, a number of individual shareholders made their opposition to the bid clear shortly afterwards.

Edinburgh-based fund manager Baillie Gifford, which holds 4.2 per cent on behalf of its clients, argued that the offer “materially under states the fundamental and strategic value of the company”.

A number of Irish retail shareholders were also unhappy and argued that ENOC was undervaluing the company, whose oil production has been increasing in recent years.

Dragon’s key operations are in a licence area off the Turkmenistan coast in the Caspian Sea. Its wells there have been producing oil at a rate of 43,000 barrels a day. Midway through last year its reserves were calculated at 645 million barrels of oil and 3.2 trillion cubic feet of natural gas.

ENOC is the United Arab Emirates national oil company and is based in Dubai. Its activities span oil exploration, production and refining.