Suitor stalemate has Cove diving

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Shares in Cove Energy, the Mozambique-focused oil explorer being fought over by Shell and Thailand's PTT, tumbled by 14 per cent yesterday as both suitors ruled out raising their bids.

After five months without landing a knockout bid, the Takeover Panel on Friday set last night as the deadline for the suitors to raise their cash offers.

Neither party has done so, giving investors a choice between Shell's £1.12bn bid and PTT's higher offer of £1.22bn, or 240p a share. Because the bids have been made in cash, rather than shares, analysts said they expected a clear majority to back the PTT offer.

Shell's failure to raise its bid disappointed the market, which had been expecting Cove's price to be bid up further, possibly to as high as 320p a share.

Cove's shares fell by 37.5p to close at 238p yesterday, indicating the market believes a deal is likely – but not definitely – going to be struck with PTT. Shell said it did not raise its offer because it simply did not believe Cove was worth any more.