Saga chief quits as Hydro bid approved

No sooner did Norway's Saga Petroleum AS accept a takeover bid by Norsk Hydro AS than its chairman resigned, citing a nationalization plan.

Norsk Hydro fended off Elf Aquitaine SA for control of the Oslo-based independent, after Elf made a final all-cash offer for Saga on June 10 of 125 kroner/share ($15.94/share).

Having not previously submitted a detailed offer, that same day, Hydro offered Saga 135 kroner/share ($17.22/share), comprising one Hydro share for every three Saga shares plus the remainder in cash.

Saga said the majority of its board concluded that Hydro's offer was the best and that Saga shareholders should accept it. A minority, comprising employees' representatives, recommended shareholders should not sell to Hydro.

The acceptance of Hydro's offer follows a convoluted takeover battle, in which state firm Statoil AS thrashed out a deal with Hydro-itself owned 51% by the state-that would enable Hydro to take control of Saga, provided Statoil was given 25% of Saga's assets in the process (OGJ, June 7, 1999, p. 31).

'Nationalization?'

Saga Chairman Wilhelm Wilhelmsen resigned on June 14, reportedly in protest at what he called moves to nationalize the company. This followed a proposal by a parliamentary committee that the government should maintain a majority shareholding in Hydro after the Saga takeover.

The committee voted in favor of demanding the right to buy enough shares in the enlarged company to maintain its 51% ownership of Hydro. Without a buyback, the state interest in Hydro would have fallen to 44%.

Wilhelmsen said, "In my opinion, this is using taxpayers' money to nationalize Saga. This has sent a terrible message to the international community."

A Norsk Hydro official told OGJ that the Storting (parliament) would subsequently debate whether to purchase more shares in Hydro. The deadline for acceptance of the bid was June 18 at 17:00 hours, by which time Hydro would need to control 70% of Saga's shares beyond Statoil's current 20% interest.

"The consequences for Saga's organization will be considerable," said Saga, "in that the company will cease to exist. An estimated 800 profitable jobs will be lost, and 800 people may be forced into unemployment."

In the meantime, Saga appointed its vice-chairman, Jannik Lindbaek, as acting chairman. He recently retired from a position as vice-president of International Finance Corp. in the U.S.

A Ministry of Petroleum and Energy official said the government had not interfered in Saga's decision to opt for Hydro but had merely cleared the Hydro-Statoil agreement behind Hydro's bid: "The ministry was only pleased that a realistic Norwegian alternative was put forward."