Blow to Capricorn Energy and Tullow Oil merger as prime investor says there is not any clear technique behind £1.4bn deal
The merger of two of London’s greatest oil companies has been thrown into doubt after a significant investor questioned the deal.
Legal & General Investment Management (LGIM) warned it had ‘strong reservations’ in regards to the proposed £1.4billion tie-up between Capricorn Energy and Tullow Oil introduced earlier this month.
LGIM, which is a significant shareholder in each Capricorn and Tullow – proudly owning stakes of three.9 per cent and 1.7 per cent in every business respectively – mentioned there was ‘no clear strategic rationale’ for the merger.
Oil merger: Legal & General Investment Management warned it had ‘sturdy reservations’ in regards to the proposed £1.4bn tie-up between Capricorn Energy and Tullow Oil
It added the deal was ‘highly unattractive’ to Capricorn shareholders.
LGIM additionally mentioned the deal would give Capricorn additional publicity to the oil markets simply because the world is shifting away from fossil fuels.
The deal has raised eyebrows within the City, with some noting that the tie-up would permit Tullow, which has a number of debt, entry to Capricorn’s money pile.