Independent directors of BW Energy have rejected a mandatory offer from parent BW Group and revealed the company could be delisted from the Oslo Stock Exchange.
BW Group launched the bid on Wednesday at NOK 27 per share, valuing the operation at NOK 6.7bn ($637m).
A letter from the oil exploration and production company’s board, excluding chairman and BW Group principal Andreas Sohmen-Pao and Marco Beenen, chief executive of affiliated shareholder BW Offshore, said directors had sought a fairness opinion from Pareto Securities.
“The board is of the view that the longer-term value potential of the company is greater than what is reflected in the offer price,” they concluded. “Accordingly, the shareholders focusing on the longer-term value potential of the company should not accept the offer.”
But the directors, including DOF Group chief financial officer Hilde Dronen, also noted that the price represents a premium to the most recent trading levels.
They believe liquidity in BW Energy shares may be adversely impacted by the outcome of the transaction and the number of shares ultimately tendered.
“The possibility for shareholders to sell shares may be reduced as a result of the offer,” the directors said.
The deal raised the prospect of yet another BW company being delisted in Oslo, although there had been no mention of this in filings.
However, now directors have said BW Group has reserved the right through its offer to pull the company from the Oslo bourse.
This will depend on the number of shares acquired.
Share price rises
The stock jumped 12% on Thursday, reaching NOK 26.85 in afternoon trading.
The offer runs to 12 January.
BW Group said on 30 November that it had bought 250,000 shares in BW Energy for around NOK 5.9m, moving it to the 40% level that triggers a mandatory offer.
The parent already held a combined 63.3% before the offer, including BW Offshore’s stake, meaning share liquidity is already limited.
BW Group said the decision to trigger the offer was aimed at enabling BW Offshore to continue with its dividend policy of paying out BW Energy shares.
