BG Group offers $12B for Origin Energy in power deal
MELBOURNE, Australia—British gas company BG Group PLC has bid $12.1 billion in cash for Australian electricity retailer and oil and gas producer Origin Energy Ltd.
BG approached the Sydney-based company late Tuesday with an offer of 14.70 Australian dollars ($13.75) per share, Origin said Wednesday in a statement to the Australian Securities Exchange.
That's a 40 percent premium to Origin's closing share price on Tuesday. Origin shares jumped 33.2 percent Wednesday to 13.95 Australian.
Australian dollars Origin shareholders are likely to find the offer attractive, analysts said.
"It's a very substantial premium when you look at current market conditions and the fact that they're probably trading on 15 times earnings, which is in line with market," said Campbell McComb, a fund manager at Armytage Private Ltd. in Melbourne and a holder of Origin shares. McComb said he will accept the offer if it is approved by the board and no higher bidders emerge.
"Origin has not yet considered the proposal," Origin said in its statement. "Discussions between the parties will take place and shareholders will be advised of the outcome."
The deal follows BG's 664 million Australian dollars ($621 million) purchase of a stake in Queensland Gas Co.'s coal seam methane interests earlier this year to start a liquefied natural gas plant near the Queensland port town of Gladstone. One LNG plant, or train, is planned at the moment, but Origin's coal seam methane assets nearby could provide gas for a second plant.
Origin is Australia's biggest coal seam gas producer and boosted production of the gas by 22 percent in the three months ended Dec. 31 compared with the previous year. Origin is also considering further production for Australia's domestic gas market. More than half of Origin's natural gas reserves are sourced from coal seam gas reserves in Queensland state, according to the company's Web site.
Origin wasn't immediately available to comment. A BG spokesman declined to comment.
