Shell To Acquire Enterprise Oil

Royal Dutch/Shell has agreed to buy British independent, Enterprise Oil, for 725p a share or £4.3bn (US $6.2 billion), including debt. Shell said the deal would be immediately positive for its cash flow and would add 6 percent to its hydrocarbon production.

"This is an attractive deal that offers a strong complementary fit for the UK North Sea and supports Shell's commitment to Norwegian growth. Elsewhere it provides us with an attractive growth opportunity in Italy and improves Shell's position in Brazil," Walter van de Vijver, a member of the Shell managing directors committee, said in a statement. Enterprise has fallen to Shell three months after it announced it was talking to third parties about a deal. ENI had been widely reported as a suitor but Shell has quietly done the deal. Shell is paying £3.5 billion cash and assuming £800 million debt.

Shell said the price represented a 45 percent premium over the Enterprise share price before it announced on January 7 that it had received an unsolicited approach. It said it was a 15 percent premium over the closing price on March 28, the last trading day. Shell said the deal would deliver a cost savings of $300 million per year. Shareholders will be offered a loan note alternative to the 725p cash offer.

"We are delighted to have agreed a recommended offer with the board of Enterprise," Philip Watts, chairman of the Shell committee of managing directors said. "This transaction is consistent with our stated strategic direction, and shifts the group portfolio more towards the upstream."

Enterprise Oil chairman Sir Graham Hearne said the deal represented almost a 60 percent premium to the Enterprise price before talks emerged. "It provides them (shareholders) with a means of realizing a substantial amount of the inherent value in the existing portfolio and accelerates the delivery of shareholder returns." However, the takeover may be seen as a defeat for Enterprise chief executive Sam Laidlaw, who in February laid out a strategy which had been aimed at enabling the company to remain independent.