The energy giant Royal Dutch Shell said on Monday it would abandon a bid for Cove Energy, leaving PTT Exploration and Production of Thailand as the sole remaining suitor for the oil and gas exploration company.
Shell said it had decided against raising its offer of £1.12 billion ($1.75 billion) for Cove, after it was outbid by PTT in May. The offer by PTT, which values Cove Energy at £1.22 billion ($1.91 billion), has the support of Cove’s board.
The board “continues to believe that it is in the best interests of Cove’s shareholders to accept” PTT’s offer, Cove said in a statement on Tuesday. Shareholders have until July 25 accept the bid.
Shares of Cove, which are listed in London, fell 14 percent on Monday to roughly 240 pence, in line with PTT’s offer.
Shell’s announcement comes after a ruling last week by Britain’s takeover panel, which said the rival bidders would have to enter a formal auction process on Monday if no decision had been made. There hasn’t been a formal auction for a public British company since 2008.
Shell, drawn to Cove’s energy assets in Africa, had urged Cove’s shareholders to accept its offer, extending the deadline several times. Some analysts said shareholders might have been holding out for a higher bid from the Anglo-Dutch company.
The bidding war, which dates to February, had centered on Cove’s 8.5 percent stake in a natural gas field in Mozambique, which is estimated to hold up to 30 trillion cubic feet of recoverable natural gas. In taking over Cove, PTT would gain resources to help meet Thailand’s rising demand for natural gas.
PTT is being advised by UBS, while Standard Chartered is advising Cove Energy.
Article source: http://dealbook.nytimes.com/2012/07/17/shell-abandons-offer-for-cove-energy/?partner=rss&emc=rss
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