ERBIL, Kurdistan Region - DNO ASA, which operates at least three major oil fields in the Kurdistan Region, said it remains ready to continue negotiations with its main partner, the UK-headquartered Genel Energy, after the latter rejected the Norwegian company's $262 million offer to acquire all its shares earlier this month.
The offer
DNO in late July submitted its proposal through its main subsidiary, DNO Iraq AS, offering three options.
First, under a cash option, the Norwegian oil and gas firm expressed preparedness to pay 69 pence in cash for each share of Genel Energy.
Second, under a share price and premium value option, the price represents a 38 percent premium over Genel's closing share price on August 6 and a 30 percent premium over the company's average share price over the past three months.
Finally, under the mixed option, shareholders can choose to receive a combination of cash and new DNO shares, the Norwegian company proposed, noting that the option will not require the approval of DNO shareholders, as it falls within the company's granted authority.
The rationale
DNO stated that this step presents a good opportunity for Genel Energy shareholders to immediately realize the value of their shares through cash, especially at a time when Kurdistan and the wider region continue to face commercial and security risks.
Moreover, the Norwegian company said the merger would create a stronger, financially capable entity in the Kurdistan Region with the necessary staff and capacity to address security and commercial challenges.
From another perspective, DNO noted that its push to acquire Genel's shares is separate from Genel's own proposal to acquire British oil and gas company Capricorn Energy. DNO said its proposal is independent of the outcome of Genel's bid for Capricorn, which has received offers from several other parties, and that the future of that transaction remains unclear.
Next steps
Genel Energy's board of directors earlier this month rejected DNO’s proposal on the grounds that it undervalues the company. However, the Norwegian oil and gas firm indicated that it remains open to discussions.
Under the rules of the UK Takeover Code, DNO has until 5:00 pm London time on September 4 to formally announce either a firm intention to make an offer or that it does not intend to make an offer for the company.
