Baillie Gifford leads revolt over Dragon Oil buyout bid



Dragon OilEdinburgh-based fund manager Baillie Gifford has spoken out in opposition to a £3.7billion offer from the Emirates National Oil Company’s (Enoc) for Dubai-based Dragon Oil.

Baillie, Dragon’s largest minority shareholder with a 7.2 per cent stake, said the offer was too low as it “materially undervalues the company’s strong growth potential”.

The comments came after ENOC, which already owns 54 per cent of Dragon, raised its offer this week to buy out the minority shareholders to 750p per share, valuing the stock it does not already own at some £1.7 billion.

Enoc, which is owned by the Dubai government, said in a statement: “We are confident that our recommended offer of 750p per share is full and fair as it represents an attractive exit opportunity for all minority shareholders.”

If Enoc’s bid is successful, it plans to delist Dragon, which produces oil from Turkmenistan, from the Irish and London stock exchanges.

Richard Sneller
Richard Sneller

Richard Sneller, head of emerging markets at Baillie Gifford, said: “Dragon Oil owns a valuable growth asset that we believe has the potential to see production rise materially over decade.

“We share Enoc’s frustration that the stock market has been slow to appreciate the growth potential of the Cheleken Contract Area and can see Dragon’s potential role at the heart of Enoc’s integrated growth ambitions.”

Enoc first made an offer of 650p per share in March, which it then raised to 735p per share in May. It also made an offer in 2009 which was rejected.

The rebuff deflated a recent rise in Dragon Oil’s shares as it closed down 0.76 per cent to 722.5p.