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UPDATE 1-Heritage Oil rejects $1.9 billion approach - FT

Published 03/17/2011, 05:49 AM
Updated 03/17/2011, 05:53 AM

* Informal approach came from Middle Eastern company - FT

* Heritage declines to comment

* Shares up 6.6 percent

(Adds Heritage comment, analyst reaction, shares)

LONDON, March 17 (Reuters) - Exploration company Heritage Oil has rejected a 1.2 billion pound ($1.9 billion) takeover approach from a Middle Eastern company, the Financial Times reported on Thursday.

The Abu Dhabi-based suitor, whose name was not known, recently sent Heritage a letter offering to pay 425 pence per share, the FT said, citing a source familiar with the situation.

Shares in Heritage, which declined to comment on the report, were up 6.9 percent at 309.8 pence at 945 GMT, topping the leaderboard of mid-sized companies.

Arbuthnot Securities analyst Dougie Youngson said the stock looked cheap following news on Jan. 26 Heritage found gas but not oil in the Kurdistan region of Iraq. Heritage stock had been trading at 437 pence before the announcement.

"Heritage has had a pretty bad run since the announcement that the Miran West field is gas rather than oil," he said. "I think the sell-off is arguably overdone. Whenever a company has been hit to the extent that Heritage has been hit recently then the perception of cheapness makes them look attractive." (Reporting by Karolina Tagaris and Paul Sandle; Editing by Dan Lalor) ($1 = 0.6221 pound)

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