Financial Trading Blog

Stock of the day 18/11/2014 – Salamander Energy



Salamander Energy, the British oil and gas explorer, has had a proverbial roller-coaster of a time in the last month, and acts as a reminder that nothing is ever certain in the markets.


At the tail end of October Salamander announced that it had been approached by various companies, including Ophir Energy and Cespa, the latter leading a Spanish consortium of bidders. Following this announcement shares in Salamander jumped 4% to 97.6, and by the final Friday of October had reached 106.15. However, after this initial flurry of excitement, prices levelled slightly, and spent much of the past two weeks hovering around the 100 mark.

Then things got interesting. After a stagnant few weeks, last Friday saw Salamander’s share prices jump to 116.4, a growth of 21%. This came after news that the consortium led by Cespa had put in an offer for the company of around £313.5 million in order to battle with a proposal from Ophir Energy. This looked set to start a bidding war between the two companies, and Salamander’s share prices responded in kind. However, there was a twist in the tale on Monday, as Cespa reprimanded Salamander for making details of the offer public, stating that Salamander’s announcement was made without Cespa’s consent. Unsurprisingly, this wrist slap was felt on the markets, with Salamander’s shares dropping from last Friday’s 116.5 to close at 109.85 on Monday.

This was not the end of the bad news for Salamander, as Tuesday morning revealed that Cespa was no longer interested in the company whatsoever. Salamander appears to have become the victim of its own attempts at pushing stock prices higher, and has paid dearly, with shares falling today by 17% to hit 91, the company’s pre-bid-talk level.

What remains in the fray is Orphir Energy’s conditional proposal. Ophir have remained quiet during this Salamander saga, and have so far provided no comment on the acrimonious break-up between Salamander and Cespa. If they are to make a bid for Salamander Energy, the market may react more cautiously than it did before.

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