Shell backs out of bidding war with Thailand’s PTT over UK’s Cove Energy

Royal Dutch Shell yesterday withdrew from the battle for control of Cove Energy Plc, paving the way for Thailand's PTT Exploration & Production (PTTEP) to acquire the British oil and gas explorer for $1.9 billion.

Shell Exploration and Production B.V. (Shell Bidco), a wholly-owned subsidiary of Shell, had in February offered to buy Cove for $1.57 billion and in May raised its offer to $1.8 billion to match a rival bid from Thailand's state-owned oil and gas company PTTEP.

A day after Cove's management agreed to Shell's $1.8 billion offer, PTTEP raised its bid to $1.9 billion. After two months of stalemate, the UK regulator stepped in on 13 July and asked both suitors to declare their current offers as being final before 16 July or an auction process would start on 17 July.

Having extended its offer three times, Shell threw in the towel yesterday and said in a short statement, ''Shell Bidco has today decided not to revise its offer of 220 pence in cash for each share of Cove, and not take part in the Auction Procedure for Cove.''

The Hague-based Anglo-Dutch oil major did not give reasons for ending the four month-long bidding war, but hedge funds, anticipating a fiercely fought auction, had been buying in to Cove stock.

BlackRock, the world's largest asset manager, holds a 7.6-per cent stake in Cove Energy.