Venture Production, the Scottish oil and gas independent, yesterday mailed out a circular to shareholders urging them to reject outright the hostile 845p per share cash bid from Centrica, insisting that the offer "substantially undervalues" the company.
The circular, which is Venture's formal response to the Centrica offer, tells shareholders: "This document... requires your immediate attention."
In the full-colour, glossy, 52-page document titled "Reject the opportunistic offer. Stand up for value - Venture is worth substantially more than 845p a share", the company informs shareholders that Venture has "high quality oil and gas reserves and resources with significant upside potential and a strong operational capability".
Venture specialises in acquiring, developing and bringing into production discovered but undeveloped oil and gas fields in the North Sea.
Its circular says the company also has "financial strength" and technical expertise already in place to continue to develop the upside within its portfolio, and it reiterated its belief that the "offer does not fairly reflect the value of Venture's reserves, nor the significant going concern value of Venture or the key strategic value that it offers Centrica".
However, in response to the circular, Centrica said: "As a matter of course, we will be reviewing the document. We would like to remind you that, as we stated in our offer document, our offer is final. The initial first closing date of the offer is August 13, 2009."
Centrica has been stalking Venture for months and now owns 29% of its target after picking up private equity group 3i's 5.4% stake.
Centrica wants to buy Venture to boost its gas production and reduce its dependence on volatile wholesale markets to help supply its 15.5 million gas and electricity customers in the UK.
However, Mike Wagstaff, Venture's chief executive, told The Herald: "Venture is the ninth largest holder of UK North Sea gas reserves and Centrica is trying to buy us on the cheap.
"Gas prices are now sitting toward the bottom, and they will certainly rise - so there is a very big potential upside in the future that is just not reflected in the Centrica offer."
Earlier this month, Venture investors Larry Kinch, and Arclight Capital Partners, signalled that shareholders should hold out for at least 1000p per share.
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