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Shell and BP fall amid talk of bidding war

Daily Telegraph 

Royal Dutch Shell and BP provided a talking point as the wider market paused for breath after two days of strong rallies.

Some traders were asking themselves yesterday whether one of the UK-listed oil majors would be tempted into a bidding war for Canadian oil sands company Nexen Inc. 

Market sources said French rival Total is set to pounce on Nexen and may be ready to go hostile to acquire the company.

The talk is that Total has hired investment bank Lazard to advise on its potential bid for Nexen.

According to one source, Total has been working on the bid for several months under the project code name of “Wolf”. However, for some reason, the code name of the bid project has now changed to “West”.

The French company is said to have lined up six or seven financing banks, including HSBC, to fund the deal. Yesterday, coincidentally, it was reported that Total plans to issue a new €1bn bond.

Rumour has it that Total is willing to pay C$32 a share for the Canadian company.

Market sources believe Total will make an approach for Nexen, which is currently valued at C$10.5bn (£5.6bn), by the end of the year. Yesterday, a Nexen spokesman told Bloomberg the company “isn’t for sale” and has “good assets”.

Royal Dutch Shell fell 34p to £16.78 while BP lost 7¾ to 512¾p.

However, most market practitioners attributed both falls to the fact that yesterday’s rise in the price of crude oil was not significant enough to help future profitability.

Tullow Oil was the biggest loser in the sector, falling 29 – 5.8pc – to 470½p.Cairn Energy also dipped, 13p to £16.13.

Elsewhere, Imperial Energy, which is in the process of being acquired by India’s ONGC for £12.50 a share, fell 24p to £10.26.


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