Eland Oil & Gas (ELA:AIM) 167p

Gain to date: 58.2%

Original entry price: Buy at 105.5p, 10 January 2019

A 166p takeover bid for Eland Oil & Gas (ELA:AIM) by Seplat Petroleum has resulted in a healthy profit for our trade on the Nigerian oil producer.

The deal, recommended by Eland management, values the company at £382m and represents a 28% premium to the closing price on 14 October before the offer was tabled. This looks like a ‘done deal’ with 60% of the shareholder base giving it their backing.

There may be some modest disappointment at the price achieved with Panmure Gordon noting the bid is around 6% below most brokers’ price targets.

However RBC Capital comments: ‘The 30% premium is in line with “tradition”, but we would note the offer price is above Eland’s previous all-time high; whereas many other companies have endured significantly greater ups and downs, and any bids may be well below previous (long-held) expectations.’

Under the terms of the transaction, shareholders on the register as of 18 October will also still get an interim dividend of 1p per share to be paid on 14 October.

Ultimately Eland management deserve credit for getting to a position of sufficient scale where they were able to attract Seplat’s attention given the difficulties involved in operating in Nigeria.

SHARES SAYS: Take profit.

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