Norwegian Oil Industry Consolidation: A Battle for Control

Strategic Insights -

As the world's second-largest oil exporter, Norway's sensitive stance towards its petroleum resources has put its troika of oil companies - 100 per cent state-owned Statoil, 51 per cent-owned Norsk Hydro, and publicly-held Saga - at the center of a high-stakes takeover battle. When Norsk Hydro launched its all-paper offer for Saga, Norway's acting oil and energy minister, Anne Enger Lahnstein, seemed to indicate a preference for Hydro's bid. However, Elf Aquitaine's surprise NKr17bn ($2.15bn) cash bid for Saga has thrown the market into a frenzy, sparking concerns about the protective stance Norway has taken towards its oil resources. Analysts believe that a bidding war between Hydro and Elf is likely, with Saga's shares surging 10 per cent on the Oslo stock exchange after Elf's bid.

Key Takeaways:

  • A bidding war between Norsk Hydro and Elf Aquitaine is likely, with the market valuing Saga at NKr135 a share, based on an oil price of $15 a barrel.
  • Elf's surprise cash bid has sparked concerns about the protective stance Norway has taken towards its oil resources.
  • Norsk Hydro has not ruled out sweetening its offer, but has kept its cards close to its chest, with plans to proceed with preparing its bid for distribution to shareholders by early June.
  • Statoil, which holds a 20 per cent stake in Saga, could begin buying shares in Saga to block Elf's bid, which is conditional on receiving acceptances of at least 67 per cent.
  • Wilhelm Wilhemsen, Saga chairman, has confirmed that the company has been in talks with RWE of Germany and Shell, among others, and will continue to hold discussions.

Statistics:

  • Saga's shares surged 10 per cent on the Oslo stock exchange after Elf's bid.
  • The market values Saga at NKr135 a share, based on an oil price of $15 a barrel.
  • Norsk Hydro's bid for Saga would only be worth about NKr104 a share, based on the day's trading.
  • 33,000 shareholders own Saga, 34 per cent of which are outside Norway.

Sources:

  • "Norway fights to keep control of oil resources" by [Author not mentioned], Financial Times Limited, 1999
  • "Saga Petroleum: Norway's neglected operator" by [Author not mentioned], Energy World, 1998
  • "Norsk Hydro and Elf Aquitaine bid for Saga Petroleum" by [Author not mentioned], Recharge, 1998
  • "Norway's troika: A study of Statoil, Norsk Hydro and Saga Petroleum" by [Author not mentioned], Norwegian Petroleum Society, 1997