Norwegian energy firm DNO has upped its takeover offer for Faroe Petroleum to £641.7 million as it continues its dogged pursuit of the North Sea oil producer.
DNO said on Tuesday evening that it has increased its offer from £608 million, or 152p per share, which has been continuously rejected by Faroe’s board.
The new figure represents a price of 160p per Faroe share.
Under the terms of the deal, DNO said that £53 million of the proceeds will be payable to Faroe directors, management and employees, while the remainder will go to shareholders other than itself.
DNO already holds around 30% of Faroe’s shares.
The group said its final offer price represents a 27.2% premium to Faroe’s share price of 125.8p on November 23, the day before the pursuit was made public.
Bijan Mossavar-Rahmani, DNO’s chairman, said: “DNO does not overpay for assets.
“But we have listened to the market and believe it is in the interests of all parties, save perhaps for a handful of Faroe directors, to close off this process by increasing our offer price to an even more generous level and announcing a final closing date.
“Among other considerations, we are mindful that this process may have been unsettling for Faroe employees and their families, and particularly so during the holiday season.”
Faroe has until now described DNO’s advances as “opportunistic”, arguing it substantially undervalues the company.
Last week, Faroe hired industry experts at Gaffney, Cline & Associates to come up with their own valuation of the company, which concluded that its assets are valued in the range of 186p to 225p per share, or between 879 million US dollars (£688 million) and 1.1 billion US dollars (£862 million).
To succeed in its pursuit, DNO requires more than 50% of investors to back the deal.
Given it now owns over 30% of Faroe itself, the Norwegian firm has overall support from 43.1% of the investor base.
DNO added: “Although DNO would prefer to achieve its 50% acceptance level and acquire additional shares, DNO is nonetheless comfortable with the possibility of its offer lapsing, leaving DNO with less than a majority shareholding in Faroe.
“In the latter case, DNO has already stated that it will intensify its efforts to ensure that Faroe is managed for the benefit of all shareholders.”
The group added that it expects to issue a request for an extraordinary general meeting of shareholders to make “appropriate changes” to the board in an effort to introduce “proper corporate governance and instil a culture of value creation for all shareholders”.
DNO said its mandatory offer has been further extended in accordance with takeover rules to January 23.