Gulf set to lift offer for Clyde

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The Independent Online
Gulf Canada is expected to come back with a bid worth about 120p for Clyde Petroleum today, the last time at which it can increase its existing 105p offer, which put a pounds 432m price tag on the British company. Clyde's shares closed 2p higher at 117.5p last night as the market anticipated a modestly improved offer.

Gulf was in last-minute discussions with Deutsche Morgan Grenfell, its adviser, yesterday at which chief executive, JP Bryan, is understood to have argued against the sort of increase that might be required to gain the support of some of Clyde's largest shareholders. Some major investors have indicated privately that they would be unhappy to take less than 135p a share for the oil explorer.

The gap between the institutions' expectations and the likely reality of Gulf's final offer sets the scene for two weeks of heavy investor arm- twisting and opens the door for a possible knockout blow from a white knight. It is expected to be a tense conclusion to what has been an acrimonious battle.

Tomorrow will also see Gulf launch a final attack on Clyde's valuation methodology. The main plank of its defence has been an attempt to persuade shareholders that a "going concern" value using its preferred cash flow valuation model would put a price tag on the company of up to 153p.

Gulf has consistently dismissed Clyde's numbers and insisted that its own 105p offer is a full and generous one.

During the bid both sides engaged independent oil industry consultants to add credibility to their claims, which increasingly focused on technical and oil company valuation.

Those arguments are thought to have split Clyde's main shareholders.