DNO has announced the Genel board has rejected a possible £202m cash offer for fellow Kurdistan-focused oil producer Genel Energy.
The Norwegian operator said it had proposed 69p in cash for each Genel share, valuing the company at around £202m.
The price represents a 38% premium to Genel’s closing share price on 6 August and a 30% premium to its three-month average.
DNO is also offering a cash-and-shares alternative of equivalent value, which it said would be funded from its existing share authorities and so would not need approval from its own shareholders.
Genel’s board rejected the approach on 4 August, but DNO said it remained willing to engage. This could be the first of a series of offers.
A deal would create a group with significant scale in the Kurdistan region, which has produced up to 285,000 barrels of oil per day.
DNO argued the offer delivers a substantial premium and certainty of value regardless of Genel’s own outstanding bid for Capricorn Energy, which Genel launched in early July.
It noted that several other parties have signalled possible offers for Capricorn, and said that if Genel’s pursuit were to fail, it would be left without the diversification it has long sought and carrying overheads out of proportion to its size.
The Norwegian group also pointed to the liquidity its cash offer would give Genel investors, given thin trading in the shares, and to the benefits of greater scale in the Kurdistan Region of Iraq, where security and commercial risks persist.