Dana’s defence of Petro Canada acquisition does not sway KNOC, investors

Dana Petroleum, which has become the target of a hostile takeover by South Korea's state-owned Korea National Oil Corporation (KNOC), tried to sway investors and its suitor alike, by saying that it is worth much more with its proposed purchase of Suncor Energy's assets in the UK.

In its defence document, the Aberdeen-based Dana said that KNOC was unaware of the scale of Dana's exploration programme and the impact of the acquisition of the oil producing interests of Petro Canada when it tabled its £18 offer in July. (See: South Korea's KNOC in talks to buy UK's Dana Petroleum) 

Dana said that according to independent expert asset evaluation, it is valued at £21.20 a share, valuing the company at £1.96 billion ($3 billion) before it agreed to pay $393 million to Suncor's Petro-Canada for production hubs in the UK North Sea. (See: Suncor divests Petro Canada Netherlands for $393 million to Dana Petroleum)

KNOC held preliminary talks with Dana that started in late June befor ending abruptly, forcing KNOC to make a £17-per-share cash offer to Dana on 2 July.

KNOC quickly followed it up by raising its bid to £18 on 20 July after Dana announced that it had discovered new oil in Egypt.

But despite its revised offer, Dana refused to engage with KNOC on the ground that KNOC should show that it has the necessary finances in place to fund the deal.

KNOC, which had maintained that it would not like to make a hostile bid but would like to conduct due diligence, secured funding guarantees from a group of Asian creditors and submitted it to Dana's advisers RBS Hoare Govett and Royal Bank of Canada on 30 July, the same day that Dana questioned the funding capability of KNOC.

Despite pressure from major Dana shareholders to open its books, Dana refused, forcing KNOC to go hostile with its bid on 20 August. (See: KNOC goes hostile with its bid on Dana Petroleum) 

The Anyang, South Korea-based oil company had said last month, that it has received letters of intent in support of its £18 a share offer from the holders of approximately 48.62 per cent of interests in Dana shares.