May 4 (Bloomberg) -- Oil India Ltd. and Indian Oil Corp. withdrew their joint offer for Gulfsands Petroleum Plc after failing to get a response to do due diligence on the U.K. explorer with assets in Syria.
“Since they have not allowed us to conduct due diligence, we are withdrawing the offer,” T.K. Ananth Kumar, director of finance at Oil India, said by telephone today. The companies set today as the deadline for a response from Gulfsands, he said.
Indian companies are seeking energy assets overseas to meet demand for fuels in the world’s second fastest-growing major economy. They have lost out to state-run Chinese companies, which spent a record $32 billion last year acquiring resources overseas while a $2.1 billion investment by Oil & Natural Gas Corp. was the sole energy acquisition for India.
“This is slightly disappointing because India needs access to reserves and oil security is very important,” said Saeed Jaffery, an analyst at Ambit Capital Pvt. in Mumbai. “India needs to get as much oil assets as possible for the long term. There are no two ways about it.”
Indian Oil shares declined 1.2 percent to 301.95 rupees in Mumbai trading and Oil India rose 0.5 percent to 1,125.15 rupees. The benchmark Sensitive Index fell 1.4 percent. The announcement came after trading hours in Mumbai.
Gulfsands fell as much as 37.5 pence, or 12 percent, to 282.5 pence in London trading. The shares traded at 295 pence at 1:27 p.m. local time.
The U.K. Takeover Panel said Oil India and Indian Oil must announce a firm intention to make an offer for Gulfsands by 5:00 p.m. U.K. time on May 11 or announce that they will not make an offer for the company. Gulfsands said April 30 that it continues to reject an unsolicited approach from the two Indian companies.
Oil India, a state-owned explorer, and Indian Oil, the nation’s biggest state refiner, said March 23 they jointly made an approach regarding a possible cash offer for Gulfsands. The companies offered 315 pence a share, which was “wholly inadequate,” Gulfsands said that day. The bid valued the U.K. explorer at about 380 million pounds ($577 million).
The Indian companies said in a joint statement today they reserve the right to bid for Gulfsands within six months if the U.K. company gets offers from other bidders or with the consent of the Takeover Panel.
Gulfsands owns a 50 percent stake in a block in Syria that produces about 11,000 barrels a day of crude oil, according to the company’s website. It also owns interests in 44 blocks, including 30 producing blocks, off the coast of Texas and Louisiana.
India plans to set up a sovereign wealth fund to help state-run explorers compete with Chinese rivals for overseas energy assets. The government has asked ONGC, India’s biggest exploration company, and Oil India to make at least one acquisition each this year to help meet demand.
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