DNO shareholders back merger with RAK
Norwegian-Dubai tie-up approved by 76 percent of voting shares; "Strong endorsement", says man who chairs both companies; Deal likely to close in January; DNO shares rise 2.13 percent as Oslo bourse plunges
November 2, 2011 11:57 by Reuters
The transaction, effectively an all-shares purchase by DNO of RAK’s oil and gas operating subsidiaries, passed with support from shareholders representing 76 percent of shares voting.
“It was a very strong endorsement,” said Bijan Mossavar-Rahmani, who chairs the boards of both DNO and RAK, the latter already having a 30-percent stake in DNO.
“It’s great to have DNO’s large and small shareholders come together like this,” he said.
He said the deal would likely close in early January, after RAK’s own board in Dubai votes on it.
RAK would then receive $250 million worth of DNO shares valued at 9.50 Norwegian crowns per share, increasing its stake in DNO to more than 40 percent, though Mossavar-Rahmani has pledged to cut its stake back to 30 percent by the end of 2012.
DNO’s share price rose 2.1 percent on Tuesday to 6.7 crowns, while the main Oslo bourse index plunged 4.24 percent on the Greek government’s surprise call for a referendum on the euro zone bailout package.
The merger deal values DNO at $1.6 billion. Its main asset is the big Tawke field in Kurdistan, while RAK operates fields in the Gulf off Oman and the United Arab Emirates.
Mossavar-Rahmani had faced opposition to the merger on fears that RAK’s enlarged stake would give it de facto control of the Oslo-based company.
In addition to promising to shrink RAK’s stake in DNO back to 30 percent, Mossavar-Rahmani said he would support putting a representative of small shareholders on the DNO board.
He dealt with dilution worries by saying RAK would accept fewer new DNO shares and more treasury shares than originaly agreed in payment for RAK’s oil and gas assets.
A separate board proposal to issue 100 million new shares in connection with a planned London listing was rejected after RAK allowed a sceptical shareholder group to vote on its behalf.
After the vote some opponents continued to criticise the merger, saying RAK Petroleum — whose shares are closely held in the United Arab Emirates and Saudi Arabia — remains an enigma with poorly understood assets.
“We’ve still been given way too little information to judge whether this is a good deal or a bad deal,” said Ketil Forland, a leading opponent of the deal.
Former DNO Chairman Berge Gerdt Larsen, who was ousted from his seat by Mossavar-Rahmani in June, said RAK’s attempt to revitalise an old Gulf field off the Emirates coast was “a fiasco” whose costs would now fall to DNO. (By Walter Gibbs and Terje Solsvik; Editing by Greg Mahlich)