Venture rejects bid from Centrica

Venture said the offer did not recognise the quality of its resources

Shareholders in Venture Production want a "significantly higher" offer than the one made by British Gas-owner Centrica, the company has said.

Centrica made an offer of 845 pence per share for Venture after the market closed on Friday, valuing it at £1.3bn.

But the Aberdeen-based oil and gas company rejected the bid, saying it "substantially undervalues" the firm.

Centrica said its offer was final. Reports say Venture shareholders want a minimum 900p per share.

Venture shares closed at 785p on Friday.

Centrica had faced a Monday deadline set by the Takeover Panel to make an offer for Venture.

It said it would only increase its offer if a bid came in from a competitor.

'Attractive offer'

Venture Production mainly operates in the North Sea. Since 1999 the company has increased production from only 200 barrels of oil per day to 45,000 barrels of oil per day at the end of last year.

In 2008 it made a pre-tax profit of £184m, an 82% increase on the previous year.

Centrica also increased its stake in Venture to 29% from 23.6%, after buying private equity firm 3i Group's share in the business.

Centrica chief executive Sam Laidlaw said he believed the offer was "attractive" to Venture shareholders.

"This transaction will provide the enlarged group with an enhanced position in the North Sea and a diversified asset portfolio across a number of asset and production areas," he said.

But Venture said in a statement: "The board has unanimously concluded the offer is not in the best interests of shareholders and should be rejected by shareholders."

Substantial stake

Mike Wagstaff, Venture chief executive, added: "We are the leading independent gas producer in the North Sea. In no way does this offer recognise the strategic position and high quality of our UK gas reserves and resources."

One major shareholder, Larry Kinch, said Centrica's offer undervalued Venture. He has urged others to demand a price which compensates properly for the long-term value of the company.

Mr Kinch was one of the founders of Venture and holds 11 million shares, or about 7.4% of the company.

He said: "I believe that Venture's shares have a value of at least £10 per share."

Arclight Capital Partners, which also owns a substantial stake in Venture, agreed that anything less than £10 per share undervalued the firm.

In a statement it described the bid as opportunistic and an attempt to "exploit the short-term weakness in the financial and commodity markets".