Financial Times: Merger talk puts Shell in focus: “Rumours that Shell was planning an approach for North America's largest natural gas producer grew after Encana shares rose nearly 10 per cent in Toronto on Wednesday amid reports that Shell had sent a large team to carry out due diligence in Canada.”: “But sceptics maintained that Shell, also linked to a merger with France's Total this week, was not in the market for such a large deal.”: Friday 21 October 2005
By Peter Garnham and Robert Orr
Published: October 21 2005
Speculation that Shell, the Anglo-Dutch oil and gas group, was considering a $45bn merger with Canada's Encana had traders talking yesterday.
Rumours that Shell was planning an approach for North America's largest natural gas producer grew after Encana shares rose nearly 10 per cent in Toronto on Wednesday amid reports that Shell had sent a large team to carry out due diligence in Canada.
Analysts said the deal made strategic sense, arguing that it would plug a hole in the company's North American gas portfolio.
But sceptics maintained that Shell, also linked to a merger with France's Total this week, was not in the market for such a large deal. Encana shares also slipped in early trade yesterday.
Shell's most-watched B shares ended 0.6 per cent lower at £17.50p
However, a £1.2bn takeover approach from another Canadian explorer, Talisman Energy, helped buoy the mid-cap oil stocks.
Paladin Resourcesjumped 27.1 per cent to 349½p following an agreed bid worth 355p a share. Analysts said the price looked full, and doubted whether a counter-bid would emerge.
Other oil and gas explorer also jumped amid hopes that they too could be consolidated. Analysts at UBS said the deal was supportive of both Cairn Energy and Burren Energy, both of which it said were "attractive" at current levels. Burren put on 4.4 per cent to 752p, while Cairn, Wednesday's biggest blue-chip faller, rose 2.5 per cent to £16.32.
Venture Productions added 7.9 per cent to 480p, Tullow Oil rose 5.4 per cent to 230½p and Dana Petroleum gained 6.6 per cent to 822p.
In the wider market, the the FTSE 100 failed to hold on to strong early gains, ending down 3.7 points at 5,164.1, having touched 5,234.0 in morning trade.
This followed its worst one-day performance in 17 months on Wednesday. The FTSE 250 rose 0.9 per cent, or 65.1 points, to 7,486.6. Volumes were good at 3.1bn.
Banking stocks performed strongly following upbeat earnings news in the US financial services sector. HBOS gained 1.1 per cent to 830½p and Northern Rock was 1.9 per cent stronger at 771p.
Barclays, up 1.9 per cent to 539p, was given a further boost after Dresdner Kleinwort Wasserstein upgraded the stock to "buy" from "hold", saying the recent share price fall was overdone.
"Our general enthusiasm for UK banks reflects our optimism about the outlook for consumer loan growth: consumers have too little debt, not too much," said analyst James Eden.
Still with financials, life assurer Legal & General rose 4.6 per cent to a high of 107¾p, after an upbeat third-quarter trading statement and 36 per cent rise in new business. However, shares moved back to finish the session flat at 102¾p.
Click here to return to ShellNews.net HOME PAGE