Blow to Capricorn Energy and Tullow Oil merger as top investor says there’s no clear strategy behind £1.4bn deal
The merger of two of London’s biggest oil firms has been thrown into doubt after a major investor questioned the deal.
Legal & General Investment Management (LGIM) warned it had ‘strong reservations’ about the proposed £1.4billion tie-up between Capricorn Energy and Tullow Oil announced earlier this month.
LGIM, which is a major shareholder in both Capricorn and Tullow – owning stakes of 3.9 per cent and 1.7 per cent in each business respectively – said there was ‘no clear strategic rationale’ for the merger.
Oil merger: Legal & General Investment Management warned it had ‘strong reservations’ about the proposed £1.4bn tie-up between Capricorn Energy and Tullow Oil
It added the deal was ‘highly unattractive’ to Capricorn shareholders.
LGIM also said the deal would give Capricorn further exposure to the oil markets just as the world is shifting away from fossil fuels.
The deal has raised eyebrows in the City, with some noting that the tie-up would allow Tullow, which has lots of debt, access to Capricorn’s cash pile.
