LONDON, Nov 30 (Reuters Breakingviews) – Sweden’s Lundin family may be getting itchy feet again. Oil and gas company Lundin Energy (LUNE.ST), in which the family holds a 33% stake, is considering a sale or merger, Bloomberg said on Monday.
Source: Reuters
The company’s vague statement that it will consider opportunities dampened some of investors’ enthusiasm, erasing the 10% gain in the $10 billion company’s stock price after the article.
The Lundin family has a history of savvy dealmaking, for example selling out of Red Back Mining for $7 billion in 2010. Now is a good time to cash in some chips.
Lundin’s fields are efficient, with a pre-tax breakeven price of $18 per barrel, according to JP Morgan, and relatively clean; the company says its operations can be carbon neutral by 2023. That could make it attractive to a diversified energy major.
Shareholders, however, may prefer a clean exit at a rich price over a messy merger with a less desirable partner.
Lundin trades at 10 times 2022 earnings, more than double the industry median, according to Refinitiv data. Any buyer will need deep pockets.
