Two previously untipped Indian companies step in at the last minute to trump a richly priced recommended offer from a well-endowed multinational that already owns nearly 25 per cent of the target. Stranger things have happened. But not much stranger.
The unlikely counter-bidders — Adani and Welspun — duly withdrew their intention of out-bidding Eni for the UK’s Burren Energy on Thursday, only hours after Darshan Desai of Euromax Capital, their London-based adviser, had described them as “very serious” about the deal. “Serious” is the last adjective the City of London would apply to Mr Desai and his clients right now.
It is significant, however, that these days it takes more than a nanosecond to dismiss the possibility of such a bid. Adani, an infrastructure company based in Gujarat, where Burren’s Indian oil activities are found, and Welspun, a supplier of pipes to the energy industry, are established Indian companies. Speculative investors have in the past hijacked the latter stages of recommended deals by buying disruptive stakes in British targets. Well-endowed emerging market predators are increasingly confident about intervening in bid battles that would have been alien territory as recently as a couple of years ago.
Baosteel’s cack-handed speculation about a possible counter-bid for Rio Tinto last month and Adani/Welspun’s short-lived flirtation with the idea of a bid for Burren demonstrate that newcomers with an imperfect mastery of the British bid process risk looking foolish. But there are plenty of others like them ready to learn from such missteps.