The value of Abbot Group soared by nearly £150m yesterday after the Aberdeen-based drilling specialist confirmed it has received a number of takeover approaches.
One of its suitors is understood to be venture capital firm 3i, which industry sources said has been given limited access to Abbot's books after making a 375p-a-share indicative offer worth about £870m.
"The board confirms that it has received proposals which may ultimately lead to an offer being made for the company," Abbot said in a statement to the Stock Exchange. "There can be no certainty that either an offer will be forthcoming, or at a price that would be acceptable to the board."
Finance director Peter Milne noted that there has been "loads of speculation over the last several months" about Abbot becoming a takeover target, but declined to name Abbot's suitors. 3i declined to comment.
Another organisation cited as a potential bidder for Abbot over recent months has been Amec, the project management and engineering group. Amec also declined to comment.
Abbot Group was founded in 1992 by executive chairman Alasdair Locke, the Perthshire-born son of an army officer, as a personal vehicle to take equity stakes in drilling rigs. Skilled in investments related to oil services and shipping companies, he established the firm after a merchant banking career in London and the Far East, working for Citigroup, American Express and Henry Ansbacher.
Locke, 54, floated the company in 1995. Since then Abbot has grown rapidly both organically and by acquisition. Its most eyecatching recent purchase was the £247m buy-out of Norwegian drilling company Songa in July last year.
The executive chairman is understood to be considering selling part of his remaining 12.96% stake, which would net him £112.8m at the reported 3i offer price. His holding increased in value by £19m yesterday.
On September 6, Abbot Group announced a 55% surge in earnings before interest, tax, depreciation and amortisation surged 55% to $97.2m (£48.6m) in the six months to June. The drilling specialist increased sales 56.6% to £343m, helped by contract wins in areas like North Africa and increased rig rates.
The company warned that full-year earnings would be towards the lower end of market expectations, however, because of increased interest payments on borrowings used to fund acquisitions.
Commenting on takeover speculation when the interim results were published, Locke said the directors would have to consider offers at the right price, while adding: "We think we have got a very good future. We have not had any conversations (with potential bidders) and we continue to run the business as normal."
The last 18 months have witnessed a boom in buy- out activity in the North Sea oil and gas sector. High prices and falling production have prompted oil companies to increase spending on drilling, leading to a surge in business for oil services firms and those interested in acquiring them.
At the end of last year, 3i admitted it was assessing investment prospects after a string of sell-offs led some to question its commitment to Scotland's oil industry. Divestments included SPS, the Aberdeen oil well products firm, sold to MI Swaco of the US for £90m.
In the year ended March 31, 2007, 3i considered buying the Asco and Perry Slingsby operations but left the way clear for bidders based outside Scotland who were ready to pay more.
Graeme Sword, head of 3i's Aberdeen-based oil, gas and power team, said in May the firm remained keen for deals. Former ScottishPower chief Ian Russell was recruited to the team in February as a part-time adviser to look for opportunities in the energy sectors.
Abbot's shares closed up almost 22%, or 63.75p, at 355.5p, valuing the company at £826m. 3i's shares firmed 34p to 1064p.
Abbot ranks in the top 20 Scottish listed companies by market value, excluding investment trusts.
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