Enterprise to increase its takeover offer for Lasmo: New document expected to value target's shares at 160p

Click to follow
The Independent Online
ENTERPRISE OIL will this week make its final bid to woo Lasmo shareholders with an increase in its pounds 1.3bn offer and a document setting out what it believes is the overwhelming logic of combining the two groups.

The increased offer is likely to be made towards the end of the week - it has until Friday under Takeover Panel rules - and is expected to value each Lasmo share at about 160p compared with Friday's close of 142p. The existing offer of 27 'A' shares and 12 warrants for every 80 Lasmo shares valued Lasmo at 136p, based on the 410p price of Enterprise shares.

The group ruled out an underwritten cash offer on Friday and, although it could borrow to offer a cash payment, this is unlikely. Enterprise is expected to increase the number of 'A' shares being offered - probably to about 29 or 30 - as well as the number of warrants. It may also allow the warrants to be converted earlier.

It may offer a dividend sweetener on the 'A' shares, where the level of payment is restricted for three years to reflect the low dividend expected from an independent Lasmo while it invests in developments such as Liverpool Bay.

The payment is likely to be increased to 5p from 3p - equivalent to the 1p a year expected from Lasmo - offering shareholders a two-thirds rise in income.

The dividend to holders of ordinary Enterprise shares is 16p, but it has ruled out offering ordinary shares as part of the package because that would increase the risk to its own shareholders.

The improved terms will be accompanied by its final offer document in which it will once again spell out the good fit between the two groups.

Lasmo has insisted that it can fund current projects on its own. Its final defence document on Friday said that debt would fall sharply to pounds 415m by the end of 1996 compared with a peak of pounds 794m in 1993.