Does this present a Takeover opportunity for you?
DNO has made a higher offer. But will the deal go through?
- The chart shows the Faroe Petroleum share price movements since Jan 2016.
- 9 Jan: DNO improves offer to 160p and claims 52.4% acceptances; Faroe board reluctantly recommends
- 8 Jan: Norwegian Petroleum Directorate cuts Faroe’s Oda Field reserves 30%
- 2 Jan: Faroe says independent report values it at 186-225p/share, a 22-48% premium to DNO’s 152p offer.
- 4 Jan: DNO claims 43.8% acceptances (30.6% stake +13.1% shareholder acceptances)
- 20 Dec: Faroe urges shareholders to reject an “opportunistic, unsolicited and inadequate” takeover offer.
- 18 Dec: DNO raises its stake in Faroe to 28.47%.
- 26 Nov: DNO makes hostile 152p offer (21% premium to Friday’s closing price)
- 27 Nov: Faroe says DNO offer opportunistic, says shareholders should reject
- Shares now 160p (at time of writing)
- Will DNO walk away, or will it return with an even higher offer?
- Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal
Trading Faroe Petroleum – An Example
Let’s say you think that Faroe Petroleum is likely to rise further as a result of an even higher takeover offer, above the latest 160p. You decide to buy exposure to £10,000 worth of Faroe Petroleum using a CFD, at the current price of 160p. To do this, you need £2,000.
For the purpose of this example, let’s assume the Faroe Petroleum share price rises by 10%. Your profit would be £1000, from your initial investment of £2,000.
Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. Sentiment towards the deal sours and Faroe Petroleum shares fall 5% and hit your stop-loss. Your loss would be £500.
This is provided for information purposes only. It should not be taken as a recommendation.