Cove Energy agrees to Shell cash offer of $1.8 billion
Oil and gas giant Shell Tuesday said it will be buying Africa-focused Cove Energy for $1.8 billion in a bid to get access to East Africa's huge gas reserves and thus ending a month- long bidding war on the Mozambique-focused exploration group.
Shell in a statement said its offer represents a premium of 95.6 per cent to Cove's closing price of 1.125 pounds/share on Jan 4, the last business day before Cove said it was up for sale.
Royal Dutch Shell has increased its original offer following a rival bid from Thailand's state controlled PTT.
Cove's directors have accepted the bid, even as PTT says it was examining its options in the wake of the Shell move.
Cove executive chairman Michael Blaha said the board believed that the recommended cash offer from "Shell provides very significant value to Cove shareholders".
"Shell represents an excellent partner for all the stakeholders in the Rovuma LNG project given its extensive project development, operating and marketing experience in the entire LNG value chain," Blaha said.
The Thai firm said in a statement that PTTEP "is currently considering its options and will make a further announcement as and when appropriate".
Business interests in East Africa have gained pace after huge gas reserves were discovered there as the region is tipped to become a major natural gas producing region supplying liquid natural gas (LNG) to energy hungry Asian markets.
Shell said the deal was conditional upon approval from the government of Mozambique amongst other things.
The deal includes a break fee clause, meaning Cove will have to pay Shell 11.1 million pounds if it later accepts a rival bid, according to Reuters.
The company had previously made a $1.6 billion approach for Cove in February, before PTTEP beat the offer, prompting hopes of a bidding war, with India's Oil and Natural Gas Corp and GAIL (India) also interested in bidding.
But in March the Indian firms stated that they did not bid.
Source:The Africa News.Net
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