City A.M. Reporter
ANOTHER shareholder in explorer Dragon Oil yesterday said it would reject a takeover bid from controlling shareholder Emirates National Oil Company (ENOC), that values Dragon at $3.9bn (£2.32bn). <br /><br />Paris-based Carmignac Gestion said the bid undervalued Dragon’s assets and prospects for growth, boosting the chances that ENOC will not succeed with its bid and may be forced to offer more cash. “It will be tight,” one source close to the process said.<br /><br />Portfolio manager Xavier Hovasse said in an email that funds under his firm’s management owned 4.3m shares, or 0.83 per cent of Dragon’s issued shares.<br /><br />Dubai state-controlled ENOC said its bid was conditional on acceptance from 75 per cent of the minority shareholders, which means investors representing around 12 per cent of the total share capital could block the deal. <br /><br />After Dragon’s largest minority investor Baillie Gifford, whose funds own 4.2 per cent of Dragon, said last week it would reject the bid, Keith Morris at Evolution Securities said there was a real and growing risk the bid would fail.<br /><br />Peter Hutton, oil analyst at NCB, said in a research note last week that ENOC has allowed itself the option to increase its original bid of 455p a share but added it may be unable to borrow enough money to do so.<br /><br />ENOC plans to finance the $1.9bn acquisition with debt from Standard Chartered and Dubai-state controlled bank Emirates NBD. However, as soon as it consolidates Dragon Oil, it would be able to use the $900m of Dragon’s cash to repay a chunk of the debt. <br /><br />ENOC declined to comment and Dragon said its independent directors still recommended the bid.