PTT Exploration and Production
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From bidding to auction The UK takeover panel has finally intervened in the acquisition of Cove, forcing PTTEP and Shell to raise their bids by 17 Jul. While this should lift the bidding risk overhang, it raises the risk of capital-raising by PTTEP if it
While we believe that PTTEP is likely to emerge as the winner, the deal would entail a capital increase which would put downside on its share price. We maintain our Underperform rating and target price basis of 25% discount to its DCF value (WACC 11%) given the risk of capital-raising.
What Happened
On Friday 13 July, the UK Takeover panel decided to end the protracted Cove acquisition by issuing a rule that effectively forces the two bidders, PTTEP and Shell, to revise their bids
by 17 July. If neither party revised its bid, the bidding process would close and Cove
