Saturday July 5, 2008
Origin rejects A$13.8bil BG takeover offer
The bid undervalues the company, says Aussie firm
SYDNEY: Origin Energy Ltd, Australia's biggest producer of gas from coal seams, told shareholders to reject BG Group Plc's A$13.8bil hostile takeover bid because it undervalues the company.
Origin said the decision by Malaysia's Petroliam Nasional Bhd to pay US$2.51bil for a stake in a rival LNG project being developed by Santos Ltd showed its resources were worth more.
The A$15.50 a share all-cash offer announced on June 24 did not reflect the true extent of its gas reserves, Sydney-based Origin said in a statement to the Australian stock exchange yesterday. The bid was 4.8% lower than Origin's closing price on Thursday.
Origin's board spurned a previously agreed approach from BG, Britain's third largest oil and gas producer, after doubling its coal-seam gas, or CSG, reserves.
Origin has risen above the offer price as investors bet the bid may be increased to win shareholder support, and touched a record A$16.49 on June 25. Origin closed 13 cents, or 0.9%, lower at A$16.15 in Sydney yesterday.
“The value of CSG is moving very quickly and the reserves base is increasing dramatically,” Origin managing director Grant King said in a Bloomberg Television interview in Sydney yesterday. “The board formed a view on May 30, and continues to hold the view, that the bid at A$15.50 doesn't appropriately value the company.”
BG took its offer direct to shareholders after Origin rejected the bid in May. BG wants Origin's coal-seam gas resources in east Australia, which may feed a proposed liquefied natural gas project supplying utilities in northern Asia.
“Origin must spend a significant amount of time and money to prove up its coal seam gas potential,” BG chief executive Frank Chapman said in a statement yesterday in response to the Australian company's comments. “Origin continues to lag its competitors in the exploration and appraisal of its CSG acreage.” – Bloomberg
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