Norsk Hydro, Statoil Win Saga Petroleum

OSLO, Norway -- Norwegian industrial group Norsk Hydro and state oil firm Statoil won control of Saga Petroleum over the weekend, defeating France's Elf Aquitaine in a takeover war.

The planned takeover will be a bittersweet victory for Norway's minority centrist government, which said it wanted to keep Saga in Norway despite warnings by some opposition parties that it might discourage foreign investment.

Hydro said Sunday that it and Statoil won control of more than 90 percent of Saga with their stock-and-cash offer of 135 kroner per share, valuing Saga at 20.1 billion kroner ($2.56 billion). Elf's rival offer was 125 kroner per share in cash.

Hydro said its initial count showed that holders of "well over 70 percent" of Saga shares had accepted the Norwegian offer, which expired Friday. Statoil already owns 19.4 percent of Saga, continental Europe's only pure oil and gas production and exploration firm.

Under Norwegian law, bidders can force all other shareholders to sell to them by reaching 90 percent control.

"We see no real obstacles left to a takeover," Hydro spokesman Tor Steinum said. Final details of how many of Saga's 33,000 shareholders accepted the bid were expected to be ready by Wednesday.

Elf, under pressure after French rival Total bought Belgium's Petrofina last year, will have to look elsewhere for acquisitions to bolster its oil and gas output.

Analysts say Elf needs a partner to cut reliance on African production. If not, it could risk becoming a takeover target itself in the longer term. Saga's proven and probable reserves of 1.44 billion barrels of oil equivalents, or BOE, are about a quarter of Elf's.

Hydro, which is 51 percent state-owned, aims to take 75 percent of Saga, which was founded in 1972 as a counterweight to the bigger state-dominated Norwegian firms and has about 1,330 employees. Statoil will get 25 percent.

Norway's Oil and Energy Ministry denied that it had prodded the Norwegian firms to buy Saga, despite the government's clearly stated desire to keep Saga Norwegian.

"This has been a purely commercial transaction," Deputy Oil and Energy Minister Erlend Grimstad said, adding: "We have no objections to this as a solution once Saga is in play."

He said the Norwegians may have been willing to outbid Elf because they might be able to make bigger cost savings from a merger with their large existing infrastructure in Norway. Among hurdles to Hydro and Statoil, the European Commission will have to decide whether to approve the takeover in coming months.

And shareholders in Hydro, whose interests range from petrochemicals to fertilizers, will vote on the takeover Wednesday at an extraordinary general meeting. State backing should ensure the needed two-thirds majority of votes cast.

Under the deal, Saga shareholders will get one Hydro share for every three in Saga, based on an average Hydro share price from June 16 to 18 of 309.71 kroner, plus a cash payment of 31.76 kroner per share to guarantee the offer price of 135 kroner.

Saga shares ended Friday at 134. Many investors preferring Elf's cash have merely sold in the market at a higher price since Elf effectively threw in the towel 10 days ago by saying it would not raise its 125-krone bid.

Saga, which produces about 190,000 BOE per day, became vulnerable to a wave of international consolidation in the oil industry last year following a plunge in world oil prices to below $10 a barrel.

It has become more attractive with a rebound in prices to about $16.50 a barrel. Even so, some analysts say Hydro and Statoil are paying too much.

Among those opposing the Hydro-Statoil offer was Saga's former chairman Wilhelm Wilhelmsen. He resigned Monday, accusing the Norwegian state of seeking to nationalize Saga, and said he would offer his 0.2 percent stake in Saga to Elf.