IN THE clubby world of Korean commerce, hostile takeovers are rare. The idea of a state-owned firm attempting one seemed unthinkable until recently. But when the board of a British target rejected a friendly offer, the Korea National Oil Corporation (KNOC) took off its gloves.
KNOC is offering £1.9 billion ($2.9 billion) for Dana Petroleum, an Aberdeen-based oil explorer with a knack of finding new fields. At £18 a share, that is a 59% premium to Dana's closing price on June 30th, the day before the first approach was made. The offer now looks likely to be accepted: KNOC has won over shareholders who own nearly half of Dana's stock.
This is probably not a sign that South Korean capitalism is growing less clubby. However, it does suggest that South Korea is joining the stampede by resource-poor Asian countries to secure future supplies of oil. Last year, KNOC made a more timid approach for Addax, a Swiss explorer, but was outbid by another state-owned entity, China's Sinopec.
This time there is a greater sense of urgency. President Lee Myung-bak has made energy policy a priority. Negotiations over American-led sanctions against Iran may hasten matters. America is unlikely to try too hard to stop South Korea buying Iranian oil, which accounts for a tenth of its consumption. But relations between Seoul and Tehran are tense: Iran's vice-president fumes that “The Koreans need to be slapped.”
It is not clear what kind of a slap he had in mind. But still, the Koreans are anxious to find less politically volatile sources of supply. They consume more than 2m barrels a day, practically all of it imported. KNOC aims to more than double production, to 300,000 barrels, by 2012. Friendly mergers with Canada's Harvest Energy, as well as smaller companies in America, Peru and Kazakhstan, will help. Yet KNOC's hard-charging boss, Kang Young-won, wants more. And his unwillingness to take “no” for an answer suggests that he is prepared to break with tradition to get it.
Oil-scarce Asian nations are so afraid of running out of fuel one day that their governments will pay far more for oil firms than anyone else thinks they are worth. The Koreans cannot hope to rival China's size and muscle, as they saw when KNOC failed to bag Addax. But South Korea has one advantage: other countries view it with less suspicion than they do China, since it is neither huge nor a dictatorship. A bid by CNOOC, a Chinese state-owned oil firm, for Unocal, an American oil firm, was withdrawn in 2005 after angry American congressmen denounced it as a threat to national security. KNOC will face no such storm of protest in Aberdeen.
This article appeared in the Business section of the print edition under the headline "KNOC comes knocking"
