PTT to take over Cove as Shell pulls out of auction

Marion Dakers
SHELL dramatically pulled out of the bidding war for Cove Energy yesterday, leaving the path clear for Thailand’s PTT to buy the British explorer for £1.2bn.

Shell, which initially had the blessing of Cove’s board for its takeover advances, said yesterday it would not improve its latest £1.12bn offer for the Mozambique-focused energy firm.

Cove’s Aim-listed shares tumbled 13 per cent to 238p – below PTT’s 240p offer price – after investors wanting to see the next round of a bidding ding-dong were disappointed.

Shell gave no reason for its departure from the fight, on the same day the Takeover Panel prepared to flush out the firms’ final offers by starting a sealed auction process.

PTT, which muscled in on the sale process in February, has extended its offer until 25 July and hopes to close the takeover within months.

Last week it had secured acceptances from just 0.25 per cent of investors, who after months of takeover interest were made up chiefly of hedge funds sitting on their hands while the chance of an improved bid remained.

Philip Wolfe, one of the bankers at UBS working for PTT, told City A.M. the acquisition will be “in Thailand’s national interest. It’s by far the biggest deal that PTT has ever done, and it gets them ahead of other Asian national oil companies [in Africa].”

Market-watchers said Shell could now turn to other stakeholders in Mozambique’s gas resources, such as Anadarko, as a route into the region.

Cove’s key asset is an 8.5 per cent stake in the Rovuma offshore fields, thought to be among the world’s biggest gas deposits.

Energy majors including BP, Total and Exxon were among the firms looking at Cove’s data room when it revealed it hoped to sell out at the end of 2011.

The Takeover Panel said last week that it would kick off a sealed auction today if a clear winner did not emerge. The firms would have submitted bids with a daily deadline until one company bested the other.

Had it gone ahead, the auction would have been the first time since 2008 that the panel had used this power.