ENOC Hikes Dragon Oil plc Takeover Offer To 800p — Act Now!

Emirates National Oil Company has increased its offer for Dragon Oil plc (LON:DGO) to 800p. Shareholders need to act now or risk a total loss!

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shareholder pressure appears to have paid off for investors in Dragon Oil (LSE: DGO). Emirates National Oil Company (ENOC) announced this morning that it has increased its offer for Dragon shares to 800p, a rise of 6.7% from a previous offer of 750p.

Shareholders who have already accepted the 750p offer don’t need to do anything. ENOC says that all acceptances will automatically be transferred to the 800p offer.

The new offer has the backing of Dragon’s two largest shareholders, Baillie Gifford and Elliott Capital Advisors. Between them, these two institutions own a 13% stake in Dragon. They have been using their voting power to argue for a higher payout.

Should you invest £1,000 in Aston Martin right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aston Martin made the list?

See the 6 stocks

The backing of these two investors means that ENOC will now own or have received acceptances for more than 75% of Dragon shares. This will allow ENOC to de-list Dragon shares, a process which the firm intends to begin shortly.

You need to act now

Any Dragon shareholder who has not accepted ENOC’s offer needs to act fast. The ENOC offer will only remain open until 3pm Dublin time on 28 August 2015.

After this time, you may be left holding unlisted Dragon shares which will be almost impossible to trade and effectively worthless.

In order to avoid this risk, Dragon shareholders need to accept the ENOC offer without further delay. Alternatively, shareholders can sell Dragon shares into the market, as long as the firm’s listing remains active. As I write, Dragon shares are trading at 799p, reflecting the certainty that the offer will now become effective.

Personally, I would simply sell my shares into the market today and receive instant cash, but whichever route you take, prompt action is necessary.

This is the final offer — there won’t be a higher bid.

Problems for sellers?

Dragon Oil has proved to be an outstanding investment for almost all shareholders:

Time period Share price gain
1 year 41%
5 years 87%
10 years 570%
Since listing (Jan 1999) 4,745%

Very few, oil stocks can claim gains like these, especially after the oil bear market of the last nine months.

However, until now, many long-term Dragon shareholders have preferred to receive Dragon’s generous dividend income and avoid the capital gain liability resulting from selling. This choice has now been taken away, as refusing to sell will probably result in a total loss.

This means that many Dragon investors could face a big capital gains tax bill for the current year.

If you expect to be in this position, it might be worth doing a bit of active portfolio management. Capital gains can be offset by losses, so if any of your investments have gone bad and you’ve been holding on in the hope things might improve, now could be a good time to sell instead.

Doing so could reduce your CGT bill, effectively reducing the size of your losses on any less successful investments.

New buying opportunities

In my view, having a large capital gains tax bill is a good problem to have, as it means your investments have been successful. 

And if your investment in Dragon has yielded a profit, the volatile conditions in the market at the moment could present some attractive new buying opportunities.

Pound coins for sale — 31 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Older couple walking in park
Investing Articles

Could £300 a month invested in US and UK shares reach a million by retirement?

Could an investor retire with a million pounds just by dedicating £300 a month to US and UK shares? Mark…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

Is £800 enough to start an ISA?

Is it worth bothering with an ISA with less than £1,000 to spare? This writer believes it may be --…

Read more »

Investing Articles

3 reasons Tesla stock may be a long-term bargain

This writer is keen to buy Tesla stock at the right price. He doesn't think it's there yet -- but…

Read more »

Investing Articles

Nvidia stock is a lot cheaper than before – or is it?

Nvidia stock has been caught in the whirlwind of market volatility. This writer has been waiting to buy, so might…

Read more »

Top Stocks

3 FTSE stocks Fools are eyeing up for choppy markets

A selection of companies listed on the UK stock market on the watchlists of four Foolish investors.

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

A £10,000 investment in Rolls-Royce shares last week is now worth this…

Harvey Jones says Rolls-Royce shares couldn't escape the volatility of recent weeks, but wonders if the recent dip is a…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Prediction: in 2 years these S&P 500 stocks will be much higher than they are today

These two S&P 500 stocks have been beaten down in recent weeks. But Edward Sheldon expects them to move much…

Read more »

Investing Articles

10% yields! Why a volatile stock market is great news for passive income investors

The recent stock market volatility has given passive income investors the chance to earn double-digit returns. But they still need…

Read more »