KNOC Acquires Dana Petroleum

The first hostile takeover case by a Korean state-run company through stock trading in a foreign country

Korea National Oil Corporation (KNOC) has succeeded in acquiring Dana Petroleum, a U.K.-based petroleum developer. It will be the first case of a hostile takeover by a Korean state-run company through stock trading in a foreign country. It will likely prompt more Korean companies to conduct M&As overseas.
In a filing to the London Stock Exchange and on its website on Friday, KNOC said it managed to secure 64.26 percent of Dana shares from its existing shareholders and obtained regulatory approval from the U.K. government.
Following its purchase of a 29.5 percent stake in Dana Petroleum on Sept. 17, KNOC received approval to buy a combined 34.74 percent stake from shareholders with a deadline of Sept. 23 at 1 p.m., bringing to 64.26 percent KNOC’s total purchases of shares from Dana Petroleum shareholders. KNOC is expected to complete the process of purchasing shares from Dana Petroleum by making payments to the agreed shareholders by Oct. 7. The shares that KNOC has secured are worth 1.07 trillion pounds ($1.67 billion or 1.93 trillion won), since the offered price was 18 pounds per share.
A KNOC official said KNOC managed to buy more than 50 percent of the shares necessary to acquire the management rights for Dana Petroleum about one month after it issued a public tender offer on Aug. 20 and obtained approval on the fair purchase of the shares.
KNOC plans to hold a board of directors meeting and appoint new executives around year-end after completing the acquisition process.
KNOC is expected to raise its stake in Dana Petroleum from the current 64.26 percent to 75 percent, a requirement for delisting the company from the stock exchange, as it did in taking over Harvest Energy of Canada. If it succeeds in delisting the firm from the London stock market, KNOC will have more leeway in managing Dana.
Dana Petroleum, an oil exploration firm based in Aberdeen, Scotland, owns oil reserves and rights amounting to 223 million barrels as of the end of 2009 in the North Sea and Africa.
After completing the acquisition of Dana Petroleum, it will raise Korea’s own petroleum development rate from the current 9 percent to closer to 10 percent, a double digit the nation will record for the first time in its history of petroleum exploration. It will likely expand KNOC’s petroleum exploration centers from the Americas and former Soviet areas to the North Sea and Africa, KNOC officials said. nw

Korea National Oil Corp. is working to expand its petroleum exploration in Korea and abroad. (from left) KNOC’s Tonghae-1 offshore gas field in Korea and KNOC President Kang Young-won.