Premiums where they're due

17 November 2009 By Nicholas Paisner

The Japanese group is offering a juicy 70% premium for the Dutch Océ. That makes bids for Cadbury and Dragon Oil look paltry. But merger arbs shouldn t get their hopes up. Canon has good reasons to be generous. Others needn t and won t rush to follow its example.

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Canon announced that it intended to acquire Dutch printing firm Océ on November 16. The Japanese firm is offering E8.60 per share of Océ , a premium of 70% to Océ's share price on November 13 and a 137% to the average share price over the last 12 months. The Management and Supervisory Boards of Océ have both recommended the intended offer, while shareholders accounting for 28.5% of Océ's capital have agreed to sell their shares to Canon.

Kraft Foods made a formal bid for confectioner Cadbury on November 9. The offer valued the company at 717p a share, a 26% premium to the UK firm's closing share price of 568p on September 4, the day before Kraft Foods' announcement of a possible offer. Cadbury chairman Roger Carr said that the company's board ‘emphatically rejected this derisory offer.' Cadbury's shares traded at 785p on November 17.

Dubai's Emirates National Oil Company (ENOC) announced an offer of 455p per share for the 48.5% of Dragon Oil that it does not already own on November 2. ENOC said that its offer represented a 35% premium to the share price of 338p on June 3, the day before Dragon Oil announced it had received an approach. ENOC said on November 17 that its bid was final, causing Dragon Oil's shares to fall 4% to 413p.

Carmignac Gestion, one of Dragon Oil's largest institutional shareholders, stated that the offer fails to recognize the substantial value of Dragon Oil's assets, existing cash on the balance sheet and future cash flow generation."

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