Dana Petroleum put up the good fight but in the end has had to accept it will be under control of the South Korean government owned Korean National Oil Corporation (KNOC). So often hostile takeovers fail, especially when the company can prove through independent study that a company is being undervalued in the takeover. This week KNOC announced it had already acquired a 64% stake in Dana with willing shareholders selling despite Dana’s plea to reject the offer and as it hoped a second player would step up.
After KNOC 64% stake ownership announcement Dana made an announcement of their own to the stock market. They recommended to shareholders to accept the offer. Dana must own 75% of the company to delist it and 90% to allow them to compulsorily buy the remaining 10%.
KNOC has been looking to expand its exploration rights and increase production output to secure government security oil supply. It was particularly interested in assets in the North Sea, Egypt, and West Africa. Some analysts as well as executives with Dana believed that KNOC’s offer of 18 pounds per share was an undervalued offer. One analyst, Richard Nolar, of Daniel Stewart, had estimated Dana’s value to be between 22.70 to 24.65 per share. Dana business leaders such as the chief executive, Tom Cross, believed the future of Dana warranted more value especially due to their North Sea exploration. Dana’s statement reiterated that it was confident that the company was worth more than the KNOC offer but at this point in the takeover attempt it was in the best interest of shareholders to accept the offer.
“In light of KNOC’s stated intention to de-list the company, today we are reluctantly recommending that shareholders accept KNOC’s offer because we believe that this is now in the best interests of the significant number of Dana shareholders who have supported the company and not yet accepted,” Dana’s chairman Colin Goodall said.
The deal will make approximately 60 million pounds for Tom Cross. Other Dana leaders will leave the deal much wealthier also. KNOC which was looking to increase production output will go from 137,000 barrels per day to 300,000 barrels a day by 2012.