Malcolm Gourlay, chairman of Clyde Petroleum, said: "I can't fault the Canadians for spotting the value in Clyde but they are trying to get us on the cheap."
In the defence document posted to shareholders yesterday Mr Gourlay said: "This offer totally fails to take account of the true value of Clyde and its continuing success, let alone its potential as an independent company."
Pointing out that Gulf Canada and its North American rivals are valued principally on the basis of cash-flow multiples, Clyde's finance director Roy Franklin said that on this measure alone Gulf's bid for Clyde undervalued the company.
For instance, Clyde's historic (1995) debt-adjusted cash flow multiple at the offer price of 105p a share was 5.7, compared with comparable international companies which stand at 8.9. On the same basis Gulf Canada's cash flow multiple stood at 12.7.
Mr Franklin told shareholders that such a wide differential "illustrates the extent of the 'accretive' value which this attempted takeover seeks to obtain for the benefit of Gulf Canada shareholders at your expense."
He added: "In the last three years our performance has been tremendous by any measure."
Mr Franklin pointed out that Clyde's share price already indicated that the City viewed the Gulf bid as too low. Gulf shares closed up a penny at 116.5p on Friday, well above Gulf's 105p offer price. "This bid has a long way to run," he said
Gulf Resources attacked Clyde's defence as a weak re-run of old news. "It's a pretty empty document, rehashing the last year. There's nothing new that changes our view of value. It omits their own broker's forecasts of declining earnings for next year.
"We are looking to acquire assets in the ground and are offering a 40 per cent premium to their net asset value."
The Gulf camp also criticised the Clyde directors for selling shares during the year.This was a reference to the sale of share options by various Clyde directors at 81p a share, just a day before Gulf Canada launched its hostile bid at 105p last month.
James Bryan, Gulf's president and chief executive, contrasted the share sale with the directors' decision to reject the Gulf bid. However, Clyde Petroleum said the options had been sold because they were reaching their expiry date. The company also said that the Clyde directors hold more shares now than they did a year ago.
Schroder Investment Management and PDFM have 40 per cent of Clyde's shares.Reuse content