Norwegian oil and gas company DNO has agreed to acquire Capricorn Energy for $396 million, outbidding a previously agreed $360 million takeover offer from Genel. Capricorn, which has operations focused on Egypt, had earlier secured shareholder approval for the deal with Genel on August 18, but the new offer from DNO represents a roughly 10 percent premium.

Genel, a company with producing assets primarily in the Kurdistan Region of Iraq, had itself rejected a £202 million ($250 million) takeover approach from DNO on August 7, describing the proposal as significantly undervaluing the company. DNO has until Friday to either renew its offer for Genel or withdraw from the process. It remains uncertain whether Genel could financially or regulatorily increase its bid for Capricorn, especially given its current takeover situation.

The acquisition of Capricorn was considered key to Genel’s strategy to diversify beyond its sole production asset in Kurdistan. DNO’s successful bid for Capricorn could therefore increase Genel’s vulnerability to a takeover by DNO, potentially reshaping the regional energy sector. Following the announcement, Genel’s shares fell by 7.1 percent, closing at 65¼p.

DNO is currently Genel’s majority partner in Kurdistan and also holds oil and gas assets in the UK and the Norwegian North Sea. The company described the Capricorn acquisition as its entry into the Egyptian market, intending to develop Egypt as a third core area alongside its existing operations in the North Sea and Kurdistan. DNO signaled ambitions to build a substantial business presence in Egypt over time.

Analysts at Panmure Liberum noted that Capricorn shareholders would need to approve the DNO deal in the coming month but regarded the vote as likely to be a formality, given the higher offer compared to the earlier agreement with Genel. They also expressed skepticism that Genel would pursue a higher bid under its current takeover conditions.

Genel, meanwhile, indicated it is reviewing the latest offer and advised Capricorn shareholders to refrain from taking any immediate action regarding the DNO proposal. The evolving situation underscores ongoing competition among energy firms seeking to expand their portfolios in politically complex and resource-rich regions.