British Gas owner Centrica is expected to make a hostile £1bn-plus bid for Venture Production, the oil and gas production company.
Sources say Centrica is gearing up for a hostile offer of at least 850p a share for its rival, but Venture is said to be holding out for 950p, or £1.45bn – while Legal & General, one of its biggest shareholders, is said to be open to a new, higher offer from Centrica.
Centrica wants Venture's reserves to supply its 10 million retail customers. Venture pumps 45,000 barrels of oil equivalent a day, and made an operating profit of £231.1m last year.
The Takeover Panel gave Centrica until 13 July to make a full bid, or it must walk away for at least six months. The company bought nearly a quarter of Venture at 725p a share in March.
The situation is complicated by bonds owned by private equity stakeholders Arclight and 3i. These can be converted into shares if any offer is above a set price, believed to be 915p a share, giving them about 10 per cent of Venture.