French oil giant Total will have to pay more than its initial suggestion of around £72m if it wants to buy Wessex Exploration, the Bristol-based hydrocarbon prospecting company which has a 1.25% working interest in the Zaedyus discovery – potentially a multi-billion pound oilfield off the coast of South America.
Wessex, which floated on AIM a year ago, was approached by Total just over a week ago with a possible cash offer of 10p per ordinary share – that compares with a price of 3.1p a year ago.
But the Wessex board of directors, led by chairman David Bramhill and managing director Frederick Dekker, has raised the stakes. Initially, the company said that in the absence of a higher competing offer and subject to shareholder consultation it would "currently be minded to give its recommendation should a firm offer be made at this price by Total".
But there has been a change of heart. The board now says in a Stock Exchange statement that "the directors are unanimously of the view that the current approach undervalues the company".
The statement adds that, having raised £12m (gross) of additional funding in November 2011, the company is fully funded for all current requirements, including participation in a further Zaedyus appraisal well and at least one additional well intended to prove up the scope of the new hydrocarbon frontier established by the successful Zaedyus exploration well.
