Enterprise Oil raid draws fire: Americans threaten legal action over PDFM sale at 20% above market price

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The Independent Online
THE ROW over Enterprise Oil's share raid on Lasmo intensified yesterday as UK investors complained to City authorities and a group of American investors threatened legal action.

Swiss Bank Corporation was understood to have contacted the Takeover Panel and the Stock Exchange about the manner in which Enterprise spent pounds 160m for 9.8 per cent of Lasmo. Foreign & Colonial was also said to be unhappy.

As today's noon bid deadline approached, all eyes were on Phillips & Drew Fund Management, the key shareholder, which sold half its Lasmo stake to Enterprise in Wednesday's controversial raid.

PDFM, still Lasmo's largest shareholder, sold the shares at 20 per cent above the market price. Other brokers complained they were given no opportunity to sell.

Enterprise's pounds 1.6bn all-paper offer has been dominated by complaints that it does not contain a cash element. Many investors, especially in America, were anxious to sell when Enterprise began buying its permitted 10 per cent of Lasmo.

One analyst said: 'It smelt of a behind-the-scenes stitch-up. The thing we've learned from talking to clients this morning is they've blown their top at Enterprise's behaviour. What you've had is a form of apartheid, where one or two get cash and all the rest have to look at is crummy Enterprise paper.'

PDFM was expected to vote its remaining 8 per cent yesterday, but Tony Dye, the fund manager, said: 'The complaints are just sour grapes. That's life. We have not accepted yet, but that does not mean we will not. I'm not telling you how we will vote.'

PDFM sold 76.9 million shares at 169p, and Sun Life 7.1 million at the same price, leaving it with 1.6 per cent. Legal & General sold 4 million at 161p, leaving it with just under 2 per cent.

Lasmo's share price at the time on Wednesday was about 148p. One Lasmo adviser said: 'It looks like a deal made outside the market and then executed through it. Enterprise should have started buying at the lowest price and given everyone a fair chance to sell.'

The Takeover Panel questioned Enterprise's brokers, Warburg Securities and James Capel, but decided the Takeover Code had not been breached.

Global Proxy Services, an American investment group managing pounds 50bn, said the purchases were an off-market sale.

Joe Lufkin, GPS president, said legal action was being considered to force Enterprise to make a similar cash offer to US investors. 'I cannot understand how these trades are in accord with SEC rules.'