A hostile move by the Korea National Oil Corporation (KNOC) for oil and gas group Dana Petroleum Plc (LON:DNX) dominated the attention of many brokers this morning. KNOC’s offer price is 1800p, which values Dana, including its convertible bonds, at approximately £1.87bn. KNOC is understood to have received letters of intent representing 48.62% of interests in Dana. Westhouse Securities said the significant premium KNOC was offering always indicated that this all-cash offer would be well supported by shareholders, despite protestations from Dana’s management. The firm said it believed that it was extremely unlikely that the deal will not now go forward. The shares are currently trading just below the 1800p offer price.

Evolution Securities agreed that there was no surprise that KNOC had chosen to go hostile given the standoff that has taken place. It pointed out that the offer would go unconditional at 50%, meaning that KNOC was almost over the finishing line. Evo noted that industry appeared willing to pay a premium for assets relative to analysts’ expectations: KNOC’s offer for Dana (20%>analysts target prices), the offer by Vedanta Resources (LON:VED) for Cairn India, part-owned by Cairn Energy Plc (LON:CNE) (> analyst NAVs) and the sale by BP (LON:BP.) of its Colombian reserves have all surprised the market. Evo also noted that with Dana cash looking for a new home in the coming months one stock it believes stands out is Premier Oil (LON:PMO), which should see volumes grow from c.40,000boe/d to over 70,000 boe/d in the next 12months.

Elsewhere, Evo downgraded mining giant Rio Tinto (LON:RIO) to “add” from “buy” based on valuation grounds and the proximity of the share price to the broker’s target Price/Target 3290p/3510p). Evo said the target was based on the average of its long-term cyclical average share price rather than reflecting boom times which could see the stock lift closer to 4760p, on its estimates. Rio Tinto’s interim earnings surpassed expectations as the company bounced back strongly from the annus horribilis of 2008/2009. While earning were spread between a larger number of shares – 1.96bn rather than 1.28bn – the figures leave the company with a relatively strong balance sheet and on comparatively low prospective multiples for the next three years.

Finally, HB Markets cut its recommendation for

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