The long and winding auction of East Africa-focused oil explorer Cove Energy took another turn today as the AIM-listed company recommended an increased £1.12 billion bid from Shell.
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The 220p-a-share offer would hand an estimated windfall of $35 million (£22 million) to Cove’s top three managers — chief executive John Craven, chairman Michael Blaha and finance director Michael Nolan. But no sooner had the deal been announced, than Shell’s arch-rival for Cove, Thailand’s PTT Exploration and Production, raised the prospect of topping its latest offer.
“PTT is currently considering its options and will make a further announcement as and when appropriate,” the Thai suitor said in a rushed-out statement. Shell made the first bid of the auction in February with an informal offer of 195p a share, or £992.4 million. This was usurped by an indicative bid of 220p a share by PTT, which Shell matched this morning. Indian groups Oil and Natural Gas Corporation and Gail India have also indicated they are mulling a joint offer.
The sale process halted in March when Esperança Bias, Mozambique’s minerals minister, said the country would slap capital gains tax on the deal. But two weeks ago Mozambique said it would levy tax on the transaction at 12.8%, which was not prohibitively high.