Ophir Energy rejects Medco's £343m offer, saying price is too low

High Oil Prices Continue To Drive Gas Prices Steadily Upwards
Uncertainty over oil prices could push down valuations in the sector (Source: Getty)

Shares in Ophir Energy fell 2.2 per cent this morning as the company’s board rejected a takeover bid from Medco Global.

The company’s directors unanimously decided to reject the 48.5p per share bid from Medco, claiming it undervalues Ophir.

Although it represents a 46 per cent premium on Ophir’s share price when the bid was first discussed in public, the offer may struggle to convince any shareholders who bought Ophir stock at around 300p in 2014.

It is also lower than Jefferies’ 52p target price for the oil and gas company which operates in Asia, Africa and central America.

Shares soared earlier this month after the London-listed company attracted interest from Asia.

The company’s stock jumped 31 per cent to 46p after the announcement on 2 January.

This morning it dropped to 44p, still much higher than the pre-bid price, but lower than Medco’s 48.5p bid for the firm.

Medco now has two weeks to make a formal offer for Ophir.

After the takeover was first proposed at the beginning of the month analysts said that the deal could cement Medco’s position as a major producer in south east Asia.

“With oil prices still volatile, any deal could flounder over a lack of agreement on what represents a fair value for the business,” Russ Mould, investment director at AJ Bell, said at the time.