State-owned Korea National Oil Corporation (KNOC) today went hostile with its bid to acquire Dana Petroleum, after it secured the approval from 48.62 per cent of the UK-listed oil explorer's shareholders.

The Anyang, South Korea-based oil company said, ''KNOC has received letters of intent in support of its share offer from the holders of, in aggregate, approximately 48.62 per cent of interests in Dana shares.''

The bid values Dana at £1.87 billion ($2.91 billion) after KNOC raised its bid to £18 on 20 July after Dana announced that it has discovered new oil in Egypt.

Despite raising the offer, talks between both companies collapsed on 8 August, after Dana refused to open its books to the Koreans for due diligence, despite major Dana shareholders pressuring the company to open its books, saying that the Korean company's revised offer was fair. (See: Shareholders push Dana to discuss £1.7-bn takeover offer with KNOC)

Dana has seen its defences fast eroding as its stock price declined by as much as 13 per cent on 12 August after it rejected KNOC's revised offer, which made way for hedge funds to buy its shares at a big discount and shift the composition of the company's shareholding base.
Under the terms of KNOC's offer, Dana shareholders would receive £18 in cash for each share, a premium of 59 per cent to Dana closing on 30 June 2010-being the last business day prior to the date of KNOC making the offer.

"We believe that our offer of 1,800 pence per share fully and fairly reflects all of Dana's recently announced and ongoing developments, together with its exploration potential,'' said Dr. Seong-Hoon Kim, senior executive vice president of KNOC.  

''It has always been our desire to agree a recommended transaction with the Board of Dana and we are very disappointed that the Board of Dana does not agree that 1,800 pence per share represents a full and fair value for the company.  

We believe that we have no alternative other than to put our attractive proposal directly to shareholders given the inability to reach a private agreement with the Board of Dana,'' he added.

KNOC held preliminary talks with Dana that started in late June, which ended abruptly, (See: South Korea's KNOC in talks to buy UK's Dana Petroleum) forcing KNOC to make a £17-per-share cash offer to Dana on 2 July and followed it up by raising its bid to £18 on 20 July.

But despite its revised offer, the board of the Aberdeen, Scotland-based Dana refused to engage with KNOC on the flimsy 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 takeover but would like to conduct due diligence, secured funding guarantees from a group of Asian creditors and gave it on 30 July, the same day that Dana voiced the funding capability of KNOC, to RBS Hoare Govett and Royal Bank of Canada, Dana's advisers.

KNOC has also indicated that it would like to retain some of Dana's top management as it has no experience in the North Sea operations of Dana.

Dana currently produces from 54 including 15 new offshore fields and 3 new onshore fields across four countries and holds more than 100 interests in exploration and production licenses spanning nine countries.

Dana's activities are focused within its two core areas of Europe (North Sea) and Africa. In Africa, Dana has production, development and exploration interests across Egypt, oil and gas discoveries offshore Mauritania and Morocco, and additional exploration opportunities offshore Senegal and Guinea.