ES in Aim-listed North Sea explorer Nautical rocketed 55.16 per cent yesterday after larger oil firm Cairn made a £414m bid for the company.
Nautical’s shares soared above the 450p offer price to close at 462p after it announced the recommended approach, signalling that investors are eyeing up a counter-offer.
FTSE 250-listed Cairn plans to acquire firms to balance out its high-risk and so far unsuccessful exploration projects in Greenland. The firm bought Agora Oil & Gas for $450m in April, pointing to a taste for the relative stability of the North Sea.
The acquisition will give Cairn “access to near-term sustainable cash-flow to help fund future activities”, said Cairn’s chief executive Simon Thomson.
Analysts at Peel Hunt said the deal was “too cheap, wait for more”, despite the 51 per cent premium to Nautical’s Tuesday closing price, as the deal fails to give full value to the firm’s potential oil deposits.
Other analysts, such as Canaccord Genuity, said the two firms were a good fit, and that potential rival bidders are likely to have already studied and discounted Nautical. Cairn has already secured acceptances from investors owning 27.25 per cent of Nautical shares.