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. Last Updated: 07/27/2016

Elf Raises Bid for Saga As Oil Battle Heats Up

OSLO, Norway -- France's Elf Aquitaine increased its offer on Monday for Norway's Saga Petroleum ASA in its battle for control with Norway's Norsk Hydro.

Elf raised its cash bid to 18.7 billion Norwegian krona ($2.34 billion) from the 17 billion in its original offer on May 28, or 125 krona per share against 115.

Elf's original offer was already higher than an all-paper offer from state-controlled Hydro. Analysts saw its increased bid as an attempt to preempt Hydro and other possible bidders.

Saga, which holds a board meeting on Tuesday, said it did not rule out fresh bids.

"How it will appear [on Tuesday] we don't know," Saga chairman Wilhelm Wilhelmsen told Reuters, calling Elf's revised offer "nice" for shareholders. "There are still others interested in the company."

Elf said in a statement to the Oslo bourse that new studies showed a takeover of Saga would give greater synergies than first expected.

Saga shares opened four krona firmer on the Oslo bourse at a new 1999 high of 128 - above Elf's 125 krona bid on widespread expectations of further offers for Saga, which is continental Europe's only pure oil production and exploration firm.

Elf shares opened down 0.36 percent in Paris at 138 euros.

Elf, which lost out to French rival Total last year in a struggle for control of Belgium's Petrofina, says control of Saga would raise its upstream oil and gas reserves by a quarter.

It set a tight deadline for acceptances, saying its offer would run until 5 p.m. (1500 GMT) June 18.

The battle for Saga is the latest in a string of mergers and takeovers in the world oil industry.

Under Hydro's counterbid, state oil firm Statoil would get 25 percent of Saga and Hydro 75 percent. Saga has indicated it prefers a foreign suitor to avoid being carved up by the two Norwegian oil giants.

Shares in Hydro, whose interests range from light metals to fertilizers, fell one krona on Monday to 324 krona, valuing Saga at 108 krona per share.

"We will have to look into this," Hydro spokesman Henrik Andenaes said after Elf's surprise new bid, declining further comment on the company's plans.

The Norwegian daily Verdens Gang said on Monday Hydro and Statoil had been planning a new cash bid of 120 krona per share to top Elf's original krona offer, perhaps on Monday or Tuesday.

Norway's centrist government has clearly signaled it favors a Norwegian takeover of Saga, hard hit by a plunge in oil prices last year to below $10 a barrel.

Deputy Oil and Energy Minister Erlund Grimstad said the ministry had no comment on the new bid by Elf. "We register the new development," he told Reuters.

Elf wants to get acceptances from at least two-thirds of Saga shareholders, reckoning it is unlikely to win the 20 percent held by Statoil. Unlike Hydro, it would keep Saga as an independent company, trading under its own name.