Australia: BG Group Offer au$13.8bn for Origin Energy
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Thursday, 26 June 2008 |
Takeover target Origin Energy Ltd has advised its shareholders to take
no action yet on a $13.8 billion offer made for the company by UK gas
producer BG Group plc.
"Shareholders are advised that they should take no action in relation
to the offer or any documents they receive from BG at this stage,"
Origin said in a statement. British giant BG Group renewed its
$15.50 per share offer for power generator and retailer Origin Energy.
The off-market takeover bid values the Australian company at $13.8
billion. BG Group's offer comes only a few weeks after a similar bid
last month was initially endorsed by the Origin board, but then fell
apart.
Oil producer Santos Ltd effectively spoiled the potential transaction
last month, not with a counter-bid but with a landmark deal with
Malaysia's Petronas over a planned liquefied natural gas plant in
Queensland. The $2.6 billion partnership between Santos and
Petronas to build an LNG plant using coal seam gas as feed, set a new
and higher benchmark in the valuation of those resources.
But BG Group said this week its offer price represented a 48 per cent
cash premium on Origin's closing price of $10.47 on April 29 just
before it announced its first offer. BG Group said its offer
represented a "material premium" for Origin shareholders and reflected
the value of Origin's energy business and its prospective coal seam gas
(CSG) development.
"Recent transactions, analysed on a comparable basis, confirm that BG
Group's offer provides full value to Origin's shareholders," chief
executive Frank Chapman said. Mr Chapman said Origin shareholders
had only "limited visibility" of the risks in Origin's current reserves
position.
Origin did not have sufficient CSG reserves for a liquefied natural gas
joint venture, he said. But earlier this month Origin managing
director Grant King said its coal seam gas assets now made the company
a far more valuable business.
At the time Mr King said Origin was worth "a lot more" than BG Group's earlier $15.50 offer.
In its statement Tuesday, BG Group said there were no CSG to LNG plants
anywhere in the world currently operating and that competing projects
in Australia were more advanced. "Under Origin's proposed CSG joint
venture shareholders would therefore bear protracted and material
technical, project execution and commercial risks," Mr Chapman
said. "Such a project even if successful would be unlikely to
generate any revenues until 2015 or 2016 at the earliest.
The takeover bid would require foreign investment approvals in
Australia and New Zealand and a green light from Australia's
competition watchdog.
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