View from City Road: Decision time for Lasmo investors

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The Independent Online
Is it enough? Plainly not, judging by the stock market's reaction. Lasmo shares were last night trading at a big discount to the 165p-a-share value of Enterprise's new and final offer, suggesting some doubt among dealers that Enterprise had bid enough to push the takeover through. The discount, however, might as easily be explained by Lasmo shareholders selling in the market for cash. With two and a half weeks left to go, the outcome is still hard to call.

With its new bid, Enterprise has attempted to meet the aspirations of Lasmo shareholders while at the same time keeping its own investment following sweet. Any more would have undermined that support. To that extent, Enterprise has certainly bid as much as is sensible. To Lasmo shareholders, the new terms are bound to seem a disappointment. Most had wanted at least an element of cash and many institutions are vehemently opposed to the sort of funny money paper Enterprise is offering. However, barring a rival bid which seems unlikely, it's the best offer they are going to get.

For the big institutional shareholders who will ultimately decide the outcome, it's make your mind up time. Should they cast their lot with Graham Hearn, who has done them proud over the years as chairman of Enterprise, or should they maintain some diversity among the oil independents by giving Lasmo a chance?

Enterprise has been poor in getting its message across, but in truth there's a lot going for this deal. From a cashflow point of view, the two companies are a perfect fit. The industrial logic is compelling too. Lasmo has put up a valiant fight. Few would have credited the company with such pluck and resilience but the tide is beginning to flow against its chairman, Rudolph Agnew. The stock market may not yet fully appreciate it, but the only thing now standing between Enterprise and victory is the possibility of a rival bid. Will that happen? Probably not, although stranger things have been known. Arco apparently took a serious look and there were negotiations, but it seems unlikely either Arco, or anyone else for that matter, is prepared to put up at this late stage the 150p-a-share-plus in cash necessary to defeat Enterprise.