Adani Welspun plans $4bn bid for Burren

MUMBAI: Adani Welspun Exploration Ltd is making a $4 billion counterbid for UK’s oil producer Burren Energy, which will pit it against Italian energy giant ENI.

A joint venture between the Gujarat-based Adani and Welspun groups will offer to buy 20% stake in Burren Energy at 1320 pence a share.

If successful, Adani Welspun will have to make a mandatory offer to buy the rest of stake, which will translate into an enterprise value of $4 billion at the expected bid price. Burren Energy shares were trading flat at 1223 pence on the London Stock Exchange on Wednesday.

ENI had early in December made a bid of 1230 pence a share for Burren Energy. Thursday is the last date for a counterbid.

Euromax Capital, a boutique investment bank based in London, is the originator and advisor for Welspun Adani.

“What makes Burren appealing to Adani Welspun is its blend of existing and developing assets and geographical diversity, according to investment banking sources, which said three weeks ago, the company had almost decided not to bid because it didn’t have access to assets data,” according to sources.

Darshan Desai, managing director of Euromax, and Bijal Doshi, India head of Euromax, refused to comment. Akhil Jindal, chief financial officer, Welspun Adani, was not available for comment.

Burren, which is a promoter of Hindustan Oil Exploration Corporation holding 27% stake, owns oil blocks in Congo and

Turkmenistan that already produce oil. It also has certain strategic assets in Egypt. Earlier, Videocon Industries is also said to have made an expression of interest, though this could not be confirmed by DNA Money.

Euro Max is the lead arranger of financing too. “They are putting in place leveraged funding of $2.5 to $3 billion through a consortium of two to three banks. About a billion dollars will be brought in by the promoters,” according to investment banking sources.

Citibank, Mizuho, Lloyds TSB and Deutsche Bank are said to have vouchered the financing. Burren Energy has licence to oil and gas blocks in Turkmenistan and in Congo, the African nation where Total SA of France and US giant Chevron also operate.

Sources said of the two blocks in Turkmenistan, one hasn’t been explored yet and is said to have immense reserves. It produces oil in both the countries.

ENI already holds exploration licences in Turkmenistan and Congo and, as an integrated player, owns a marketing network.

Burren shares traded at 1220 pence in London on Wednesday, down a quarter percent.

Adani Welspun was floated to explore opportunities in the oil industry. It owns two blocks in India awarded under Nelp VI, and another in Thailand.

ENI already holds exploration licences in Turkmenistan and Congo and, as an integrated player, owns a marketing network.

Burren shares traded at 1220 pence in London on Wednesday, down a quarter percent. The share had hit an all-time of 1255 pence on December 4.

A deal to acquire Burren, investment bankers say, is unlikely to meet regulatory resistance since it is very straightforward in all respects.

n_raj@dnaindia.net