DNO Tops Genel’s Bid, Wins Capricorn Board’s Backing

Norway’s DNO ASA has gatecrashed Genel Energy’s agreed takeover of Capricorn Energy (LON: CNE), tabling a higher recommended cash offer of 384p a share and forcing the Egypt-focused explorer’s board to switch its recommendation.

Capricorn shareholders had already approved Genel’s rival cash deal at meetings on 18 August, but that offer has not formally lapsed and remains subject to outstanding Egyptian regulatory approvals. Capricorn’s shares last closed at 343p on Friday, before this morning’s announcement, so the market has yet to react to the new terms.

DNO’s offer values Capricorn, an Edinburgh-headquartered independent oil and gas producer focused on Egypt’s Western Desert, at US$5.214 a share, made up of a US$4.224 acquisition price plus a US$0.99 special dividend. That is roughly 10% above the value of the terms agreed with Genel Energy, an oil and gas explorer also active in the Kurdistan region of Iraq, and sits at the top of Capricorn’s 52-week range of 181.8p to 384p, a 45% premium to the undisturbed close of 266p in early March.

Capricorn’s board, advised by broker Canaccord Genuity, now unanimously recommends the DNO deal, structured as a Scottish scheme of arrangement, a court-approved process for taking over a UK-incorporated company. The switch hands shareholders a materially better cash exit than the Genel transaction they had already voted through, even though that deal remains technically live pending sign-off from Egyptian authorities.

For DNO, an oil and gas producer with existing North Sea and Kurdistan assets, the move marks its first entry into Egypt. The Norwegian group has delivered a 119% total shareholder return over the three years to 31 July.