Financial Times: Eni 'needs to double to shut out predators': “Industry analysts have already suggested Royal Dutch/Shell or Total would be interested in the Italian company because of its portfolio of oil and gas projects in the Middle East, the Caspian, Latin America and west Africa.” (ShellNews.net)
By Paul Betts in Milan
Published: October 11 2004
Eni must double its size and market capitalisation to about €150bn ($186bn) over the next few years to put it beyond the reach of a predator, Vittorio Mincato, the Italian oil group's chief executive, warned in an FT interview.
Although he has no big acquisition in his immediate sights, the head of the world's sixth largest listed oil group believes Eni will have to launch a large acquisition once oil prices drop.
"The market is now too expensive with oil prices over $50. But when prices fall to more sustainable levels we will look at opportunities," he said.
Mr Mincato also believes the Italian government would no longer object to Eni funding a big acquisition partially by shares, a move that would bring Rome's stake below 30 per cent, as long as the deal reinforced the company's independence and preserved its Italian roots.
In the past, Mr Mincato had to use cash to fund acquisitions in the UK and Norway. Using shares would strengthen Eni's ability to launch a big takeover.
Since Mr Mincato took over as chief executive in 1999, Eni's capitalisation has grown from €40bn to €75bn.
"But we need time to keep growing and double our current market cap to become too big a mouthful to be taken over," he said.
He issued a similar warning last week answering a question during an Italian parliamentary hearing, saying Eni could face takeover if Rome sold its 30 per cent stake.
Industry analysts have already suggested Royal Dutch/Shell or Total would be interested in the Italian company because of its portfolio of oil and gas projects in the Middle East, the Caspian, Latin America and west Africa.
Mr Mincato insisted he continued to take a "prudent approach" to acquisitions and was "not going to spend money stupidly".
In the past, the 68-year-old Eni veteran resisted political pressure to make big acquisitions in Argentina and Brazil and was criticised for failing to clinch a merger with Elf before it was absorbed by French rival Total.
He is now putting final touches to Eni's new four year strategic plan expected to continue emphasising growth in upstream oil and gas.
Although highly regarded with Eni shares rising 83 per cent since he took over as chief executive, Mr Mincato again faces uncertainty about his future.
Eni's top management is due to be renewed in May. Although Mr Mincato has prepared an internal succession, the company risks facing renewed political intrigue.
Some members of the ruling majority argue Eni's management has become too independent and want to appoint a new top team closer to government.
Institutional investors have pressed instead for the appointment of Mr Mincato as non-executive chairman to help groom his chosen successor as chief executive.