PTT wins battle for Cove as Shell drops out Thailand's biggest gas and oil company PTT Exploration and Production has won the battle for control of UK-listed Cove Energy after rival bidder Royal Dutch Shell dropped out on Monday, sending Cove's shares down more than 13 per cent. The UK Takeover Panel had on Friday set out an auction procedure to bring an end to the bidding war for Cove, which began in February. But Shell announced on Monday it would not raise its bid of 220p a share, which values Cove at £1.12bn, leaving PTT's offer of 240p a share, or £1.22bn, in the lead. Shares in Cove had been trading above both offers for several months, reflecting investors" hopes of higher bids to come, and Shell's decision to walk away caused the stock to close down 37.5p, or 13.6 per cent, at 238p on Monday. PTTEP, which is 67 per cent owned by Thai state-owned parent company PTT, has so far attracted acceptances from only 0.25 per cent of Cove shareholders, but the absence of other bidders means that acceptances for PTT's offer, which expires on July 25, are now expected to start coming in. The abrupt end to the bidding war and the fall in Cove's share price has left several hedge funds and arbitrage investors nursing big losses. Cove's key asset is an 8.5 per cent stake in Mozambique's Rovuma Area 1, thought to be one of the world's richest natural gas discoveries. Anadarko of the US operates the field and owns a 36 per cent stake, while Mitsui of Japan, Bharat Petroleum and Videocon of India, as well as the Mozambique government, own smaller stakes. For PTT, buying Cove is central to its push to diversify Thailand's energy supplies and to increase imports of liquefied natural gas. PTT has been investing heavily in building LNG regasification facilities and has signed an LNG supply agreement with Qatar, but it has also been keen to buy into suppliers of LNG directly. Pailin Chuchottaworn, PTT's chief executive, told the Financial Times last month that the Cove bid was "part of a strategy," and was "a very careful, calculated move." He also emphasised that it came at a time when PTT was seeking to redefine its role as a national oil company and be more active in mergers and acquisitions. Shell is also keen to gain exposure to east Africa's booming gas industry. It already owns exploration projects in Tanzania and, following the failure of its Cove bid, it could look at deals with the other partners in Rovuma, such as Anadarko or Videocon. Those close to the bidding believe that the prospect of being involved in a public auction was a factor in Shell deciding to pull out. The oil major might have been at a disadvantage in any future attempts to buy assets in Mozambique's gasfields if the sellers were aware of how high it would have raised its bid. "It would have looked bad for Shell if they had been bid up and lost," said one person involved. PTT was advised by UBS, while Morgan Stanley advised Shell and Standard Chartered advised Cove. Additional reporting by Anousha Sakoui in London