This stance, adopted by a significant number of City investors, could seriously hamper Enterprise's takeover as the increasingly bitter battle reaches its first closing date on Tuesday.
The value of the all-paper bid has dropped sharply since it was launched almost a month ago. Based on Enterprise's closing price of 398p last Friday, it values Lasmo at about 132p a share, against the target's market price of 148p.
However, many of Enterprise's own institutional investors are opposed to sweetening the terms because of doubts over the merits of the deal.
One said: 'We remain to be convinced about the industrial logic of the takeover. What concerns us most is that Enterprise should not overpay.
'We feel that the current offer is high enough and it is difficult to see how it could fund a cash element. That is the majority view among many institutional shareholders.'
However, others believe that it could receive strong backing with an fully underwritten cash and share offer, or a convertible share issue.
Although Graham Hearne, Enterprise's chairman and chief executive, won overwhelming support for the bid at a crucial shareholders' meeting last week, in private he is understood to have come under tough questioning from City investors over his belief that size is an important factor in the oil industry.
Mr Hearne has said publicly that the takeover would give Enterprise bigger international clout in its attempts to compete with oil giants such as Shell, Exxon and Mobil.
'You need size and scale to make meaningful and lasting progress,' he said when the bid was launched. ''This is a big boys' game and Lasmo will give us the next step we need.'
But his remarks appear to have backfired. Rudolf Agnew, Lasmo's chairman, has used them to criticise Enterprise's bid.
Lasmo, however, is still far from winning the fight to remain independent. Its share price reflects market expectations of an improved offer from Enterprise, or of a higher bid from a rival suitor, possibly British Gas, Mobil or Amerada Hess.
Andrew Shilston, Enterprise's finance director, said: 'We have said to our shareholders many times that we will not overpay.'Reuse content