Shell makes £992m bid for Cove Energy
Royal Dutch Shell has made a £992.4m takeover bid for Mozambique-focused Cove Energy, to expand its business in East Africa where it sees “significant potential” for gas production.
Shell has offered 195p per share in cash, which Cove’s management said this morning they would recommend to shareholders.
“Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell’s entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa,” the company said today.
Yesterday, Cove’s shares closed at 154.5p, with analysts at Citigroup saying that “valuation looks stretched” in a research note.
Shell’s offer is more than a 70pc premium to Cove’s closing share price on January 4, when Cove announced it was putting itself up for sale.
In December, Cove had opened up a data room to certain parties who had expressed an interest in buying its 8.5pc stake in a liquefied natural gas (LNG) project in Mozambique.
Shell also announced this morning that Malcolm Brinded will step down as executive director of its upsteam international business, and appointed Andrew Brown as upstream international director.