Hostile bid to acquire co., targeting E&P, LNG, utility.
U.K.-based integrated energy services company BG Group Plc (London: BG) has increased its offer to acquire Australia's largest integrated energy company Origin Energy Ltd., Sydney, Australia, (Australia: ORG) to approximately US$13 billion. BG increased its offer from A$14.70 per share to A$15.50, representing a 48% premium to Origin's closing price of A$10.47 on April 29 when the offer was announced and a 72% premium to Origin's 90-day volume-weighted average price. BG Group previously offered to acquire all 880.8 million outstanding Origin shares at US$14.96 each (A$15.50). Origin rejected that bid, saying it undervalued the company due to a recent reserve report of increases in reserves and a new valuation of its LNG partnership with Petrobras. Origin has E&P, LNG and utility assets in Australia and New Zealand. The E&P assets include offshore and onshore acreage in the Otway and Perth basins, the offshore Bonaparte Bass Basin and the onshore Cooper/Eromanga and Surat and Bowen basins in Australia andthe Kupe gas project in the Taranaki, Northland and Canterbury basins of New Zealand. Origin also is the largest Australian producer of coal-seam gas, with interests in major CSG fields at the Spring Gully, Fairview and Peat areas in the Bowen Basin in Queensland. Proved and probable reserves are approximately 425.6 million barrels of oil equivalent (90% gas). Origin chairman Kevin McCann says, "It is the board's belief that accelerating the monetization of Origin's CSG reserves through a formal process of inviting proposals from suitably qualified and experienced parties will enable Origin to test the value of its CSG assets through a competitive process." BG Group chief executive Frank Chapman says, "Our offer gives shareholders the opportunity to secure a 72% premium (on a 90-day volume weighted average trading as of April 29) which is particularly attractive in the current adverse market environment. Origin withdrew its support for BG Group's initial proposal and commenced an alternative but undefined gas-monetization process to 'test' the value of its coal-seam gas reserves, without any certainty that such a process would deliver superior value to Origin shareholders." He adds that the new project may cause Origin to commit "to multi-billion-dollar investments beyond its current balance-sheet capacity and to manage risks of a nature and scale which would be unprecedented in its history." He concludes that BG Group's offer will remain open for "a reasonable period." BG Group is being advised by Goldman Sachs International and Gresham Advisory Partners.