Financial crisis could slay £2.3bn - Dragon takeover

The £2.3 billion Dubai takeover of London-listed Dragon Oil could be among the fall outs from the financial crisis in the Arab emirate.

The Dubai state-owned Emirate National Oil Company (ENOC) is embroiled in a messy bid to take 100% control of the company with the offer sparking a revolt among UK-based minority shareholders, who believe Dubai is trying to get its hands on Dragon on the cheap.

ENOC, which already owns more than 51% of Dragon, is offering 455p a share to investors holding the rest of the Caspian Sea explorer and developer.

Fund management house Baillie Gifford has broken ranks and said it will use its 4.2% stake in Dragon to attempt to whip up a grassroots rebellion and spark a revolt by activist shareholders.

Even before the Dubai financial crisis the dissidents were hopeful they can get enough support to see off ENOC. The Dubai oil company needs the support of 75% of independent shareholders to get its takeover through. That means dissidents speaking for only a little above 12% of Dragon could block it.

The rebels believe it does not fairly value the 645 million barrels Dragon is reckoned to be sitting on under the Caspian.

However, the revolt could yet be bittersweet. If ENOC is either defeated or walks away from its offer, Dragon shares could crater.

Though its stock has nearly quadrupled over the last year, the shares have been trading under the ENOC offer price, even though analysts have been saying the bid undervalues the company.

Today, Dragon Oil's shares fell 4¾p to 395¼p.