Korea National Oil goes hostile with £1.68bn move for Dana

Seoul gave KNOC a $6.5bn warchest this year to compete with energy-hungry Asian state firms aiming to secure future supplies for their growing economies. Chinese and other firms have so far outgunned KNOC in bigger M&A battles.

The biggest hostile bid by a South Korean firm comes after Dana's management earlier this month rejected KNOC's 1,800 pence per share proposal.

The Aberdeen-based explorer urged investors to take no action.

Investors said that, with two months having passed since KNOC's approach, Dana needed to quickly produce another bidder or other material reasons why the bid undervalued the company.

"They've got to pull a rabbit out of the hat," one hedge fund manager said.

However investors were pessimistic about another bidder emerging at this late point.

KNOC said it had already secured non-binding letters of intent from investors representing 48.6 per cent of Dana shares.

The 1,800 pence/share offer represents a premium of 59 per cent to the closing price of Dana shares on June 30, the day before news of the KNOC approach emerged.

Meanwhile, shares in gas producer BG Group gained as much as 6.7 per cent yesterday following a report of a possible 54bn bid for the company, of which analysts were generally dismissive.

The Daily Mail reported rumours that oil major Royal Dutch Shell was considering a 1,600 pence per share cash bid for BG. Both companies declined to comment on the rumour.

"This comes up once a year every year for the last ten," said one analyst who did not wish to be named.

Panmure Gordon analyst Peter Hitchens said he thought the rumour was probably "idle Friday chat".

"The market is looking for M&A themes and targets. There's an M&A theme running through the market right now and it's BG's turn today," said another analyst who didn't want to be named.

Shares in BG closed at 1,091.50 pence, up six per cent.