VPC Venture Prod.

U.K. oil and gas producer Venture Production PLC (VPC.LN) admitted defeat in its defense against a hostile GBP1.3 billion takeover bid from utility Centrica PLC (CNA.LN) and recommended that all shareholders accept the offer.

Major Venture shareholders Larry Kinch and ArcLight Capital Partners, who previously said Centrica's offer was too low, have decided to sell their combined 19.2 million shares, equivalent to 12.8% of Venture's share capital, the company said.

Centrica already either owns, has acquired subject to settlement or has received valid acceptances equivalent to 58.7% of Venture shares, Centrica said Monday evening.

"The board of Venture continues to believe that Centrica's final offer substantially undervalues Venture. However, the board recognizes that, in the event that the offer is declared wholly unconditional, Centrica will have control of Venture," and any shareholders who do not sell run the risk of holding a minority stake in a de-listed company, said Venture in a statement.

Venture's statement represents a victory for Centrica, which has long been on the hunt for gas resources to make up for its declining reserve base. Venture's management said Centrica's offer of 845 pence per share substantially undervalued the company, which has growing output and a strong financial position.

However, Centrica's management seem to have judged correctly that a majority of Venture shareholders would rather pocket the cash today than hold out for the possibility of a higher price in the future.

 
   -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com 
 

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