Fusion Oil and Gas said yesterday it had opened discussions with a number of potential bidders. All are said to be larger than Sterling Energy, a UK oil group which made a 40p a share takeover offer last month.
In a statement yesterday, the chairman of Fusion, Peter Dolan, urged shareholders "to take no action in relation to Sterling's offer". Mr Dolan believes that Sterling's all-paper offer of 3.5 new shares for each Fusion OIl share, valuing the company at £39.5m, or 40.25p per share, is too low.
Fusion feels that combining the two companies' operations "would not enhance the value of either", since Fusion's projects are in deep waters in west Africa, whereas Sterling's work is mainly in shallow waters in the Gulf of Mexico. Fusion's board says "it does not believe these disparate portfolios are complementary". Sterling Energy already has a 20.4 per cent shareholding in Fusion.
Fusion's board added that it expected shareholders' interest in the group's exploration upside would be substantially diluted if a merger with Sterling went ahead.
Fusion said it hoped to develop its discussions with the interested bidders "rapidly". Its shares, however, were unmoved yesterday at 39.25p.Reuse content