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Capricorn shareholder Schroders against Tullow merger in current form

FILE PHOTO: Workers walk past storage tanks at Tullow Oil's Ngamia 8 drilling site in Lokichar

LONDON (Reuters) -Capricorn Energy shareholder Schroders would vote against the oil and gas producer's planned merger with Tullow Oil in its current form, the investment company's head of UK and European Mid and Small Caps told Reuters on Tuesday.

Andy Brough added a fairer deal would see Capricorn shareholders get 70% of the new entity. The current plan, which sees 47% go to Capricorn shareholders, has been criticised by other Capricorn investors.

The deal needs to win approval of at least 75% of Capricorn shareholders, a threshold that might be in jeopardy if hedge fund investors who have been critical of the deal turn their derivative investments into direct shareholdings.

Major Capricorn shareholders Madison Avenue and Legal & General IM, which together hold over 11% of the group according to Refinitiv data, have also come out against the merger.

Schroders holds around 5.7 million Capricorn shares, which represents just under 2% of the company's outstanding shares, according to Reuters calculations.

Tullow is due to report first-half results on Wednesday. Shareholder votes are due to take place before the end of the year.

The boards of Capricorn and Tullow support the merger. But Capricorn also said last week it was exploring alternative deals after unnamed parties expressed interest.

(Reporting by Shadia Nasralla;Editing by Tomasz Janowski and Emelia Sithole-Matarise)