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Major shareholder complains that Delek's takeover bid is too low


Ithaca Energy (IAE:AIM) 118.5p

Gain to date: 37.8%
Original entry point:
Buy at 86p, 22 December 2016

North Sea oil producer Ithaca Energy (IAE:AIM) is up nearly 40% on our entry price after becoming subject to a recommended 120p per share offer from Israeli firm Delek (DLKG:TLV)
(6 February).

We’d cash out now. The modest 12% bid premium has disappointed some shareholders given that Ithaca is on the cusp of substantial cash flows from its Stella field.

Top TEN for 2017

Paul Mumford, a fund manager at Cavendish Asset Management which is the company’s fourth largest shareholder, ‘strongly’ urges shareholders to reject the offer.

‘Ithaca’s shares have been as high as 140p per share in the past and with a further rise in oil price it could go even higher, meaning this acquisition would be relatively cheap,’ he says.

ITHACA ENERGY (DI) - Comparison Line Chart (Rebased to first)

This opposition seems unlikely to derail the deal given Delek already owns 19.7% of the business. Canaccord Genuity says the valuation is ‘fair but not generous’ adding ‘the derisking effect of the all-cash offer just about offsets a slightly disappointing premium’.

It does not expect a rival bid and moves its recommendation on the stock from ‘buy’ to ‘sell’. Canaccord suggests Faroe Petroleum (FPM:AIM) could be another takeover target in the sector with Delek picking up a 13.2% stake shortly before Christmas.

Sell in the market now.

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