The British government said Tuesday that it would relinquish its "golden share" in Britoil PLC, removing a major roadblock to British Petroleum Co. PLC's $4.4-billion acquisition of the North Sea oil company.
Since December, BP has accumulated 79.8% of Britoil's 504 million outstanding shares in a takeover bid priced at 2.5 billion pounds. The oil giant has been paying 500 pence, or $8.85, for each Britoil share.
The government retained its special share--which gives it a controlling vote over the company's affairs--when it privatized Britoil in two stages in 1982 and 1985. The Treasury said it would give up the share under certain conditions agreed to by BP.
Britoil said its board would meet to decide whether to abandon its resistance to BP's offer.
Britoil's shares rose 1.77 cents to finish at $8.83 (499 pence) on the London Stock Exchange Tuesday. BP's shares finished unchanged at $4.39 (248 pence).
Jobs at Stake
The government doesn't intend to exercise its special share as long as BP upholds promises to maintain headquarters for some of Britoil's operations in Glasgow, Scotland, and meet other conditions, Chancellor of the Exchequer Nigel Lawson said in answer to questions in the House of Commons.
Scottish politicians had expressed concern that the takeover would mean the loss of jobs in Scotland.
Lawson said control of the golden share will eventually be transferred from the Treasury to Britain's Energy Department, where legal moves will be taken to terminate it. "An acceptable arrangement has been reached with BP," Lawson said. "I am quite sure there will be no backsliding by BP."
BP Chairman Peter Walters said in a statement that the company was "pleased that our discussions with the government have produced a successful resolution of the issues surrounding the special share. We believe the outcome will enable us to manage the assets of Britoil . . . in the interests of both our shareholders and the U.K. economy."
But a Britoil spokesman, who asked not to be named, said: "If you look at the statements (by the government and BP) you'll see it's a two-party agreement between the chancellor and BP."
Although Britoil officials met with Treasury officials concerning the government's use of the golden share, the company wasn't a party to the agreement, he said.
Labor lawmaker John Smith, his party's Treasury spokesman, said in the House of Commons that BP had "gobbled up" Britoil, and told Lawson: "You have exacted precious little from BP in exchange for handing Britoil to them on a plate."
Atlantic Richfield Co. of Los Angeles also had pursued Britoil, but abandoned its attempt and sold its 24% Britoil holding to BP last month. Meanwhile, the Kuwaiti government, through its London-based investment vehicle, the Kuwait Investment Office, has acquired a stake of more than 19% in BP.
Here are some of the terms to which Lawson said BP has agreed:
- BP will locate both Britoil's and BP's North Sea exploration and production head offices in Glasgow, where Britoil currently has its headquarters. The office will control BP's exploration and production operations in Norway, the Republic of Ireland and Britain.
- Britoil will be managed and operated as a separate independent subsidiary and will have its own chief executive.
- The Britoil board is to be headed by a non-executive chairman with no previous BP connections. The appointment will be a joint agreement between BP and the government.