Enterprise Oil poised to increase bid for Lasmo

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ENTERPRISE OIL is expected to raise its pounds 1.3bn bid for Lasmo next week in a final effort to win control of its smaller rival, but the fully underwritten cash alternative some shareholders were hoping for has been ruled out.

Enterprise advisers are working on a revised all-paper offer worth up to 165p a share; the existing share swap terms will be improved and the dividend on the new Enterprise 'A' shares raised to enhance their attraction to institutional shareholders.

Final details of the new bid were being drafted yesterday as Lasmo published the remaining elements of its defence. These include a base-case net asset valuation of between 180p and 211p a share and a forecast cashflow surplus of pounds 435m for the three years to the end of 1996.

Enterprise said it was so unimpressed by Lasmo's latest claims that it had decided against providing an underwritten cash alternative offer. Though the company insisted that no decision had yet been taken on whether to revise the offer, it is understood that plans for a new bid are well advanced. All that is required is formal board approval.

Analysts said they believed the outcome of the takeover tussle would be close, even after improved terms from Enterprise. Most Lasmo shareholders were hoping for at least some cash. However, there was relief in the stock market that Enterprise had backed away from a full underwriting and its share price rose 10p to 410p.

P&D Fund Management, with nearly 16 per cent of Lasmo shares, will play a key role in deciding the outcome. Both sides have been furiously lobbying P&D, which attracted much criticism from executives of LWT earlier this year after selling them out to Granada.

Rudolph Agnew, chairman of Lasmo, claimed that Enterprise was in decline with its earnings inflated and its dividends underpinned by questionable accounting practices.

'It is seeking to rescue itself by pouncing on Lasmo, aiming to pick up Lasmo's attractive portfolio on the cheap.

'Within 18 months most of our major developments should be on stream and our finances until then are demonstrably secure. Enterprise adds nothing to the value of Lasmo's assets,' he said.

Enterprise said the asset values claimed by Lasmo were not credible. 'If Lasmo really believed in its valuation why did it not provide this information to its shareholders when it raised new equity at 105p.' Enterprise also attacked Lasmo's estimate of cash flow saying it was based on too optimistic a view of oil prices.

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