BG Group, the UK-based energy giant, has put its A$13.8 billion (€8.42 billion) bid for Australia's Origin Energy direct to shareholders, saying management was wrong to reject the offer and may have overvalued its coal-seam gas reserves.
The hostile all-cash offer values shares of Australia's biggest producer of gas from coal seams at A$15.50 each, 48 per cent more than they were trading at before BG, the UK's third-largest oil and gas producer, first bid on April 30th.
Origin rejected the approach on May 30th, citing the increased value of its reserves. Origin's shares jumped to a record as investors bet BG may have to increase its offer to win shareholder support.
"Some Origin shareholders would be thinking long and hard about accepting this,'' said Gavin Wendt, resources analyst at Fat Prophets Funds Management in Sydney.
"BG is giving itself room to move. This may not be the last offer on the table."
Origin's gas resources in eastern Australia, which may feed a proposed liquefied natural gas project supplying utilities in northern Asia, have triggered the renewed bid.
The Sydney-based company's suggestion that its coal-seam gas reserves were worth A$16 billion overstated their value, BG Chief Executive Officer Frank Chapman said in a media conference call today.
Origin shares rose as much as 93 cents, or 6 per cent, to an all-time high of A$16.45 and were trading at A$16.44 at 3.15pm in Sydney. The stock closed at A$15.52 yesterday having risen from A$10.47 on April 28th prior to BG's first approach at A$14.70.
If successful, the acquisition would be the second-largest foreign takeover of an Australian company after the $14.2 billion purchase last year of Rinker Group Ltd. by Cemex AB, North America's largest cement producer.
Origin shareholders should take no action over Reading, England-based BG's offer, the company said in a statement to the Australian stock exchange.
Origin's board rejected the previous agreed offer after doubling its coal seam gas reserves. It also said the decision by Petroliam Nasional Bhd., Malaysia's national oil company, to pay $2.51 billion for a stake in a rival LNG project being developed by Santos Ltd. showed its resources were worth more.
Bloomberg