Govt challenged to prevent BP control

Press, 26 January 1988, Page 24

Govt challenged to prevent BP control

NZPA-Reuter London The Conservative Government has been challenged to honour pledges to prevent the oil giant British Petroleum (BP) from taking control of the Britoil oil exploration company in which it has won a majority stake. BP increased its shareholding in Britoil to 54 per cent on Friday after the U.S. Atlantic Richfield Company (Arco) accepted an improved BP offer for its 24.03 per cent stake. A BP statement said it was raising its, take-over offer for Scotland’s biggest independent company to £2.5 billion (SNZ6.7 billion) from £2.27 billion (SNZ6.OB billion) and urged Britoil to recommend its shareholders accept. The Britoil board was to discuss the offer early today (N.Z. time). Opposition- Labour Party finance spokesman,

Mr John Smith, urged the Government to stop the takeover by invoking its own so-called “golden share” in Britoil which gives it power to outvote all other shareholders. He said Chancellor of the Exchequer, Nigel Lawson, had personally guaranteed the independence of Britoil and added: “Mr Lawson is now on the spot... BP have ignored him from the start and treated his golden share as if it did not exist. Parliament will expect him to act upon the assurances he gave so freely in 1982.” Mr Lawson told legislators this month that the Government would not relinquish control of Britoil when he promised: "The powers of the special share will be used for so long as it is in the national interest.” The assurance was repeated by a Treasury spokesman

after the BP deal with Arco was announced. Arco accepted a BP offer improved from £4.50 a share to £5, but that figure is still £2 below Britoil’s own valuation of its shares. Financial analysts said that by taking a majority shareholding in Britoil and not making its deal with Arco conditional on the golden share, BP was trying to call the Government’s bluff. They said Lawson could only invoke the golden share at the expense of private shareholders in Britoil, which would be in contradiction with the Government’s philosophy, and there were no obvious issues of monopoly he could use to justify intervention. A successful takeover could lead to BP owning Britoil, while the Government controlled the company’s board of directors.