Assuming investors would expect Gulf to pay extra to gain control of Clyde, the company's calculations suggested it would not be prepared to recommend a take-out price of less than 190p or 200p, well ahead of the 105p that Gulf has so far tabled, and implying a value of at least pounds 782m. Clyde's shares added 2.5p to 121.5p as the market continued to bank on a higher offer from Gulf or a rival bid from a third party.
As expected, Clyde's defence focused on valuation methodology, with Clyde insisting that a multiple of cashflow, the method usually used in North America, best measured its potential value. For the first time it indicated what would be an appropriate cashflow multiple and published a much higher- than-expected estimate of operating cashflow for the year to the end of last month.
Gulf dismissed Clyde's second defence document as "not credible" and said it "contained no positive surprises, contained desperate claims on value, ignored the medium and longer-term production profile of the company and ignored the company's net asset value".
Clyde said a range of 5.3 to 6.4 times cashflow best valued the company, citing figures calculated by oil industry consultants JS Herold, which had put the company in the third quartile of comparable companies on the basis of a number of measures, including return on capital.
Operating cashflow in the year to December 1996, Clyde said, was pounds 127m, representing a 29 per cent increase on the 1995 figure which appeared in the company's first defence document. Discretionary cashflow, after tax and interest, increased by 37 per cent to pounds 113m.
Clyde's latest defensive salvo also included an estimate of net debt at the the end of 1996, showing much lower-than-expected borrowings of pounds 108.4m.