Shell buys Enterprise for $6bn

April 2, 2002 Posted: 3:29 AM EST

The deal is expected to raise Shell's oil output and earnings

LONDON, England - Royal Dutch/Shell Group is buying Enterprise Oil, the UK-based independent producer, in a deal worth £4.3 billion ($6.1 billion).

The deal will boost Shell's production capacity and open up a new market for the Anglo-Dutch oil giant. It also ends months of speculation about a possible takeover of Enterprise.

Shell, Europe's biggest oil company, said on Tuesday it would pay 725 pence a share in cash for Enterprise, which is 15 percent higher than the group's closing price of 629p on Thursday ahead of the long Easter weekend.

The share purchase price put the value of the deal at £3.5 billion, with Shell also taking on £800 million in Enterprise's debt.

The purchase of Enterprise Oil, the UK's largest independent exploration company, is expected to raise Shell's oil and gas output by about 6 percent. It will also increase Shell's presence in the North Sea, as well as in Italy and Brazil.

Shell said the integration of Enterprise would generate annual cost savings of $300 million and boost its earnings from 2003.

"This transaction is consistent with our stated strategic direction, and shifts the group portfolio more towards the upstream," said Shell Chairman Phil Watts.

Enterprise Oil has been a takeover target since January, when it announced it had been approached by an unidentified suitor and had rejected the offer. Italian oil and gas group ENI had been rumoured to be the most likely buyer, having previously bought another UK-based independent, Lasmo Oil.

Enterprise (ETP) shares jumped 14.5 percent to 720 pence in early trading on Tuesday in London.

Shares in Shell Transport & Trading (SHEL), which owns 40 percent of Royal Dutch/Shell Group, were down 0.6 percent to 521 pence in London. Royal Dutch, which owns the rest of the oil giant, fell 0.2 percent to 62.60 euros in Amsterdam.

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