Shell's offer for Cove lapses

Anglo-Dutch energy producer Royal Dutch Shell has formally thrown in the towel in its quest to buy Africa-focused oil and gas firm Cove Energy, leaving the way clear for rival bidder PTT Exploration and Production (PTTEP).

Shell decided on July 16th not to increase its offer for Cove Energy, ducking out of a bidding war with Thailand's PTTEP. After receiving acceptances of its offer from shareholders representing just 1.25% of the existing share capital of Cove it has allowed its offer to lapse.

In contrast to the desultory response to Shell's offer, PTTEP said it has received acceptances of its offer from shareholders accounting for 74% of the issued share capital of Cove; the Thai outfit has set a minimum acceptance level of 90% in order for the takeover to go through.

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Both companies were keen to get their hands on Cove's interests in gas fields off the coast of Mozambique. PTTEP's £1.22bn bid, based on a price of 240p per Cove share, trumped Shell's 220p a share offer, and won the backing of the Cove board.

The defeat represents a setback for Shell, which on Wednesday announced a 25% fall in earnings on a current cost of supply basis for the second quarter of 2012.

JH