Gulf bid for Clyde escapes MMC referral
Thursday 16 January 1997
With two weeks to go before day 39 of the bid, the last date on which Clyde can offer new information to shareholders, attention is expected to focus on the two sides' preferred valuation methods, with one broker saying a take-out price of up to 150p a share is a possibility. Yesterday's close of 119p suggests the market expects an improved offer from Gulf or a third-party approach.
The defence being put together by Malcolm Gourlay and Roy Franklin, chairman and chief executive respectively of Clyde, is expected to focus on Gulf Canada's use of net asset value as a base for calculating the premium its bid represents. Clyde will claim that, thanks to its steady, sustainable production, it is better valued on a multiple of its current cash flow, the preferred method in the US where there are more companies with Clyde's relatively low-risk, predictable production profiles.
The net asset approach favoured by Gulf has been the traditional way of valuing UK oil explorers because in the early days of the opening up of the North Sea companies often had no production and cash flow to measure. Their assets could only be measured by attributing an asset value to future, expected production.
Clyde will claim over the next two weeks that such an approach gives no credit for the skill of its management in prolonging production by buying in and discovering new oil reserves. In its first defence document recently, the company surprised analysts with a higher-than-expected estimate of reserves, put at 130 million barrels of commercially realisable reserves and 225 million of commercial and probable reserves. Those figures had shown a sharp rise despite record production levels.
As well as arguing for a higher multiple of cash flow, Clyde is expected to bring out a hastily compiled set of results for the year to 31 December.
Gulf, which last week reported acceptances of just 0.02 per cent of Clyde's shares and extended its bid until 24 January, has a week after Clyde's final defence to announce a final offer.
Any rival bid is not expected to emerge until after that date.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...