PTT trumps Shell’s bid for Cove
Thailand’s PTT Exploration and Production has trumped Royal Dutch Shell’s bid for Mozambique-focused explorer Cove Energy by offering £1.22bn ($1.9bn).
The move shows the growing international interest in East African gas finds.
Cove management said just hours ahead of a deadline for investors to accept Shell’s bid, it now backed PTT’s 240 pence per share bid, after earlier supporting Shell’s 220 pence.
Cove has an 8.5 per cent stake in massive gas finds offshore northern Mozambique. Project leader Anadarko Petroleum plans to build large plants to freeze the gas to liquefied natural gas for export in ships.
PTT sees Cove as an opportunity to secure energy resources to help power Thailand’s economy. Shell, the leading Western oil group in the LNG business, hoped Cove would be a springboard to a major presence in East Africa.
East Africa is set to become one of the largest gas exporters in the world, executives operating in the region believe, after Anadarko, Eni, Statoil, BG Group and others announced major discoveries across Mozambique and Tanzania.
Shell declined comment on PTT’s bid.
Whoever buys Cove will have to pay a capital gains tax to Mozambique, which Shell has estimated at around $200m, pushing the value of PTT’s bid above $2bn.
Cove shares closed at 224 pence on Tuesday.
Three sources close to the process said around 70 per cent of Cove shares were in the hands of risk arbitrage hedge funds, whose strategy is to squeeze every last penny out of a takeover situation.
Such investors will likely now start betting that Shell will make a counterbid.