ENI buys British Borneo for £263m

British-Borneo, the oil and gas exploration company, was yesterday snapped up for £263m by ENI of Italy after a series of mishaps, including striking water instead of oil in one of its key Gulf of Mexico operations, sparked a cashflow crisis.

Analysts described the deal as a "firesale" with British-Borneo being sold "cheaply" at a recommended cash price of 70p a share.

Last July, it traded at 242p, but its shares have been underdmined by two profits warnings, the most recent of which came last month.

Including British-Borneo's substantial debt, the Italian energy company paid a total of £788m for the company, whose shares had closed at 50p on the day before the offer was made.

Alan Gaynor, British-Borneo's chief executive, said: "With our high level of debt, we had come up against short-term cashflow problems. We were struggling to develop the fields on our own. We have been hit by a whole series of problems in the Gulf of Mexico, and if we had any further mishaps, we would have been in difficulty.

"That, together with the 40 per cent premium that Eni were offering, meant that we were duty-bound to put this to our shareholders."

British-Borneo, whose shares closed up 12.5p at 68.5p yesterday, said it had terminated its talks to bring partners in to develop its assets. Mr Gaynor said that an outright sale provided more certainty to shareholders. Institutional shareholders, including Prudential Portfolio Manager. representing 19.4 per cent of British-Borneo's shareholding, have indicated their intention to accept the offer.