Dragon deal ‘too cheap’

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The Emirates National Oil Company, an arm of the Dubai government, is buying up the 48% of Dragon it does not already own in a deal that has long been expected by industry watchers.

The cash deal values Dragon at £2.35 billion.

At 455p a share, that's an 11% premium to the price at the close of trading on Friday.

Peter Hutton at NCB Stockbrokers told clients: "We think this level of bid passes too high a proportion of future value to Enoc, and represents a level that Enoc can afford to pay, not what the stock is worth."

Other shareholders, which include Baillie Gifford with 4% and JPMorgan with 3%, might decide to take the cash, however, given Enoc's powerful position and reluctance to increase its offer.

The shares added 35½p to 445¾p, suggesting the City doesn't expect the bid price to be topped.

Enoc first took a 46% stake in Dragon in 1998, paying 15p a share. Its holding went up to 69%, a stake that has since been diluted by rights issues.

Dragon's principal asset is an oil field in the east of the Caspian Sea, offshore of Turkmenistan. It also has interests in the Republic of Yemen.

Enoc believes its financial strength will help Dragon to expand.

Dragon was advised by Davy Corporate Finance and HSBC. Enoc's advisers are Standard Chartered and Goodbody Stockbrokers.