DNO has revised its recommended acquisition of Capricorn Energy by making its wholly owned bidding vehicle responsible for paying the entire $5.214-per-share consideration, replacing a structure that depended partly on a special dividend from Capricorn.
The change does not increase the value offered to shareholders or the approximately $396 million equity valuation. Instead, it increases the portion funded directly by DNO Bidco by an estimated $75 million and removes the reliance on Capricorn being able to declare and pay the planned dividend in full.
Under the original offer announced on 1 September, DNO Bidco was to pay $4.224 in cash for each Capricorn share. Shareholders were also expected to receive and retain a special dividend of $0.99 per share from Capricorn, producing a combined acquisition value of $5.214. DNO Bidco will now pay the full amount, while Capricorn’s board no longer expects to declare the corresponding special dividend.
Moving the $0.99 dividend component into the offer increases DNO Bidco’s cash payment by approximately 23.4% from the original $4.224 per share.
The transferred amount represents approximately 19% of the total $5.214 offered for each Capricorn share. The total shareholder value is unchanged, but responsibility for delivering that value has moved entirely to the buyer.
DNO, DNO Bidco and Capricorn said the revision provides shareholders with greater certainty because receipt of the full amount will no longer depend on Capricorn’s board being able to declare and distribute the special dividend before the acquisition becomes effective.
The offer implies an equity value of approximately $396 million on a fully diluted basis, equivalent to £294 million using the exchange rate specified in the announcement. This is the value attributed to Capricorn’s issued and to-be-issued shares, not an enterprise value incorporating debt or other financial obligations.
Dividing the stated equity value by the $5.214 offer price implies approximately 75.9 million fully diluted shares. Applying the additional $0.99 payment to that estimated share count indicates that DNO Bidco is assuming approximately $75 million of consideration that would previously have been paid by Capricorn.
Because the $396 million valuation is rounded and the final diluted share count could change before completion, the $75 million figure should be treated as an estimate rather than a definitive payment amount.
The $5.214 acquisition price was equivalent to 388 pence per Capricorn share using the £1-to-$1.3447 exchange rate cited in the announcement.
That price represents a premium of approximately 46% to Capricorn’s closing price of 266 pence on 10 March 2026, the final trading day before the offer period began. It is also 61% above the volume-weighted average price of 241 pence during the three months ending on that date.
DNO’s offer remains $0.474 per share above the acquisition value attributed to the earlier Genel Energy proposal. The difference represents a premium of approximately 10% and adds around $36 million to Capricorn’s implied equity value on the constant-currency basis used in the announcement.
The revision does not alter those valuation comparisons. Its importance lies in replacing the two-part payment structure with a single payment from DNO Bidco.
Capricorn’s directors, advised by Canaccord Genuity on the financial terms, consider the revised offer fair and reasonable. They intend unanimously to recommend that shareholders vote in favour of the scheme at the court meeting and support the associated resolutions at the general meeting.
DNO Bidco will finance the acquisition consideration, fees and related expenses from DNO’s existing cash resources. Lambert Energy, financial adviser to DNO and Bidco, confirmed that sufficient resources are available to satisfy the revised acquisition price in full.
DNO’s 2025 annual report provides historical context for the size of the proposed payment, although it does not establish the company’s financial position in September 2026.
DNO ended 2025 with $453.7 million in cash and $885.9 million in net debt. It reported revenue of $1.47 billion, EBITDA of $843.6 million and operating profit of $512.8 million. Net cash flow from operating activities reached $589.8 million, while free cash flow was negative $36.6 million.
The $396 million Capricorn equity valuation is equivalent to approximately 87% of DNO’s reported cash at the end of 2025, 47% of its 2025 EBITDA and 27% of its annual revenue. These comparisons illustrate the transaction’s scale against DNO’s latest audited annual figures; they do not measure its current liquidity or indicate its post-acquisition leverage.
DNO’s balance sheet changed materially during 2025 following its acquisition of Sval Energi. The company issued $1 billion of senior unsecured and hybrid bonds, partly to finance that transaction and refinance existing debt. It also arranged facilities of up to $910 million linked to its North Sea production.
The Sval acquisition, completed in June 2025, carried an enterprise value of $1.6 billion and cash consideration of $450 million. It quadrupled DNO’s North Sea production and contributed to a 43% increase in total net production to 110,667 barrels of oil equivalent per day during 2025.
The Capricorn announcement does not state that DNO will use its production-linked facilities or raise new debt for the acquisition. Existing cash resources are the only confirmed funding source.
The acquisition is intended to be implemented through a scheme of arrangement under Part 26 of the Companies Act 2006. It remains subject to the conditions contained in the original Rule 2.7 announcement and the detailed terms that will appear in the scheme document.
The companies expect the scheme document, proxy forms and election materials to be sent to shareholders no later than 29 September 2026, unless DNO Bidco, Capricorn and the UK Takeover Panel agree to a later date.
The scheme is expected to become effective during the fourth quarter of 2026 or the first quarter of 2027, subject to the outstanding conditions. The acquisition has therefore been recommended but has not been approved or completed.
Shareholders will be able to elect to receive the consideration in sterling. The amount paid under that facility may differ from the stated 388 pence because the exchange rate will be determined closer to payment and conversion costs or taxes may apply.
Lambert Energy is advising DNO and DNO Bidco, while Canaccord Genuity is acting as Capricorn’s financial and Rule 3 adviser. Moelis is also advising Capricorn. Freshfields and Advokatfirmaet Thommessen are legal advisers to DNO and Bidco, with Ashurst Perkins Coie UK advising Capricorn.
