News late out last night on predators circling Petrofac. It’s not surprising as the company has been halved in price due to an SFO investigation that is yet to show any proof of wrong doing.
Petrofac is a big player with plenty of rolling contracts and some projects worth billions. Any predator will know the industry well and know the real value of those contracts. The only thing the potential buyer is unsure about is of course the outcome of the SFO enquiry. That said, if previous industry reports and fines are to be understood, then any fine is likely to be minor when compared to the hefty slice already incurred on the companies market cap.
PFC was trading at 490p prior to the commodity bounce which occurred several weeks ago. PoO has since increased by over 25%. Yet PFC’s sp is some 70p below those previous highs.
Not for the faint hearted. There is significant risk here. But after the market cap being sliced in two, it’s certaily offering decent risk vs rewards odds with or without a potential bidding war.
US oilfield services giants Schlumberger and Halliburton are understood to be among the firms circling scandal-hit Petrofac and are bolstering their attack teams to capitalise on the FTSE 250 firm’s vulnerable share price.
Just days after The Sunday Telegraph revealed that Petrofac has beefed up its defences in preparation of a takeover siege from some of the biggest names in the oilfield services industry, City sources have confirmed that the two US firms and an undisclosed Middle Eastern bidder have parachuted in advisors to look at an opportunistic bid for the company.
Petrofac has been left vulnerable to a swoop after its share price fell by half following a Serious Fraud Office probe into the firm’s alleged involvement in the Unaoil corruption scandal.
The Daily Telegraph understands that no party is ready to pull the trigger imminently but City chatter has suggested a bid of around 600p per share is being considered by the interested bidders.
That would represent a hefty premium on its current 406.9p share price but a bargain compared to the 946p-per-share valuation it peaked at earlier this year before the SFO investigation.
It is thought that top shareholder and chief executive Ayman Asfari will be resistant to a takeover but a spate of consolidation deals in the oil services sector – including Wood Group’s merger with Amec Foster Wheeler – has upped the pressure on firms languishing with lowly valuations.