Dana Petroleum rejects takeover bid from Korea

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Dana said talks with the Korea National Oil Corporation had stalled after the bidder refused to raise its offer and declined to sign a confidentiality agreement.

Dana, whose shareholders including Schroders and BlackRock, were thought to be supportive of a deal, said it had offered to open its books to the Koreans but only, as is usual, in return for a non-disclosure deal. However, the Koreans refused to comply.

The British company, which is run by founder and chief executive Tom Cross, was at pains to explain that it had been bending over backwards in order to accommodate its Far Eastern suitor.

In an unusual opening paragraph to its statement, Dana said: "Following repeated unconditional invitations from Dana to meet with senior KNOC board representatives, Dana's chairman and chief executive officer flew to Calgary, Canada, in order to fit in with KNOC's availability... with a view to progressing the proposal in a friendly and constructive manner."

Despite Cross providing a comprehensive update on the progress of Dana's most-promising assets, KNOC said it would not increase its 1800p a share offer "regardless of any new information".

Dana's shares dropped by 9%, or 153p, to 1540p.
Cross stood to make as much as £34 million from a takeover of his company.

Korea has been keen to secure fresh supplies of energy resources due to its own lack of oil production. The country has a population of 50 million and consumes 2.3 million barrels of oil a day — nearly a third more than the UK.

Evolution analysts issued a note to clients saying: "Today's announcement does not bode well for the success of KNOC's 1800p all-cash offer. In effect the two sides have reached an impasse with the risk now that KNOC walks away."

A source at KNOC insisted the deal was not dead yet, and that it had not walked away from the talks.

Oriel Securities analyst Nick Copeman said: "To want to pay the current share price, you have to assume there will be either a hostile bid from KNOC or a third party is waiting in the winds. And we think both of these outcomes are unlikely."