Abbot becomes target

Abbot Group, an oil services business, is weighing up several approaches that could see the FTSE 250 company taken private.

On October 4, Aberdeen-based Abbot responded to press speculation by telling the stock exchange that it had received proposals that could lead to an offer for the company.

Abbot saw its share price soar after press reports said private equity house 3i was readying a 375p per share offer for the company, valuing it at about £870m (€1.26bn).

Abbot itself is no stranger to deal making. In April 2006, the company acquired Songa, a Norwegian drilling company, for £247m.

3i has past experience in the oil services sector. In 2004, it invested in the US$925m buyout of Vetco Gray as part of a consortium, selling it to General Electric in 2006 for US$1.9bn. Prior to that, it invested in Petrofac, which floated in 2005.

But the fact that Abbot referred in its announcement to “proposals” could mean that 3i would face a battle to win the business.

Indeed, the news has been seized on as proof that M&A in the UK’s mid-market is alive and well for private equity and trade buyers, despite the troubles in the debt markets.

Along with speculation around an Abbot buyout, recent large mid-market deals have seen materials science group Cookson make an indicative proposal of £491m for Foseco, a developer of metallurgical chemicals, and French logistics and transport services business Groupe Norbert Dentressangle agreeing a £254.4m takeover of UK logistics group Christian Salvesen.

Other recent oil and gas deals centred on the North Sea include General Electric’s £289m offer for Sondex, an oilfield equipment maker. Meanwhile, Centrica, the owner of UK energy group British Gas, is buying North Sea gas producer Newfield UK, a subsidiary of America’s Newfield Exploration Company, for £242m.

Also, Venture Production, a UK oil and gas company, has made a £14.2m bid for Wham Energy, a North Sea-focused business.

Tim Burke