Sealed-bid auction for Cove likely, Shell extends offer again

At risk of sounding like a broken record, Royal Dutch Shell has announced that it has extended its offer for AIM-listed oil and gas producer Cove Energy.

Cove shareholders will now have until July 25th to decide on the takeover. The previous deadline ran out at 13:00 on Wednesday July 11th.

Shell's £1.12bn offer for Cove has now been extended on three separate occasions after Thai firm PTT Exploration and Production (PTTEP) trumped its 220p-a-share offer with its own bid of 240p a share, valuing the company at £1.22bn. Despite having already recommended Shell's offer to its shareholders, Cove's management unsurprisingly decided to then back the offer by PTTEP which was 9.1% higher.

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Analysts at Investec said yesterday that a sealed bid auction for Cove should take place next week, meaning that final offers are due by "day 46" (July 17th). "With yesterday's passing of 'day 39', the last day for Cove to publish new information, we expect the [Takeover] Panel to call for an auction in the next few days. Such an auction will ostensibly take place if the offers from both PTT and Shell remain live and not final by the end of trading on July 17th".

Shell, which has stuck with its 220p-a-share offer, said that it had received valid acceptances of the offer in respect of around 3.27% of Cove's existing share capital, which it may count towards the satisfaction of the acceptance condition to the offer.

"Shell's decision to announce a recommended Offer for Cove fits with Shell's strategic aim to drive forward with its investment programme to deliver sustainable and profitable growth," Shell said in April at the time of the first offer.

"The proposed acquisition of Cove's portfolio would mark Shell's entry into exciting new hydrocarbon provinces, in Mozambique and Kenya, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa."

BC