Centrica bags Venture
25 Aug 2009
With its acquisition of a 16.8-per cent stake in addition to its 31.7 per cent that it already holds in Venture Production, Centrica has finally gained control of the Abeerden, Scotland-based company.
Centrica, the UK's largest utility that recently acquired British Energy has been trying to consolidate its position in Venture for months as it looks to looks to build its own supplies and insulate the group from wholesale gas prices.
Venture's management has repeatedly rebuffed Centrica's overtures, but its acquisition of the stake in trading yesterday has finally clinched the issue.
Centrica's 845p-per-share hostile offer has already found favour from owners of another 10.2 per cent of venture shares, gives the firm 58.7 per cent stake in the company. It can now go on to gain support of 75 per cent of shareholder to delist the company.
Centrica's proposed move was cleared by the European competition watchdog last Friday (See: EU clears Centrica's £1.3 billion Venture bid) and the extended deadline for a decision from investors is the end of the week. Venture Production board is now expected to recommend the offer.
The tussle between the two companies began in March as Centrica announced that it had acquired a 22.3-per cent stake in Venture at 725p per share, a move that was quickly branded as ''opportunistic'' by Venture board. Later in July, Centrica made an offer at 845 p per share on a valuation of the company at ?1.3 billion which was again rejected by Venture chief, Mike Wagstaff saying that the offer did not fairly reflect the value of the company's resources and that shareholders need to get at least 900p.
Wagstaff is now set to walk away with more than £20 million after Centrica won its hostile bid for the oil and gas business yesterday.
According to analysts Venture will announce that is would buy the rest of the shares in the business for 845p a share.
Wagstaff, who had all along sought to keep the company independent, owns 1.67 per cent of the company which is worth £21.17 million at the offer price. Wagstaff and the firm's finance director, Peter Turner are set to leave once Centrica takes control.
The two are entitled to 12 months' remuneration following the takeover, which amount to hundreds of thousands of pounds in salary, bonuses and share entitlements.
With the acquisition, Centrica will be able to boost its own reserves of gas and reduce its dependence on wholesale markets. Centrica produces about 35 per cent of its energy needs from its own resources, but with the acquisition of a 20 per cent stake in British Energy that should rise to 45 per cent.
The Venture acquisition would enable it to supply 60 per cent of its energy needs from its own resources.
