Page last updated at 12:19 GMT, Tuesday, 24 June 2008 13:19 UK

BG's bid for Origin goes hostile

An Origin LPG tank
Origin is Australia's second-biggest power retailer

BG Group has made a 13.8 Australian dollar ($13.15bn; 6.7bn) hostile bid for Australia's Origin Energy.

BG, demerged from British Gas in 1997, made the all-cash offer for Australia's biggest coal seam gas producer after Origin rejected a bid approach in May.

If Origin shareholders approve BG's offer, it would lead to the second-largest takeover of an Australian company by a foreign firm.

Origin shares jumped more than 5% to A$16.35 on the news.

It doesn't need an increase in price - it is a good offer as it stands
Frank Chapman, chief executive, BG Group

Last month, Origin spurned BG's offer after it said its reserves of coal seam gas were worth far more.

Higher offers?

BG Group chief executive Frank Chapman said the latest offer was a 48% premium on Origin's share price immediately before the bid was launched and represented full value for its takeover target.

"It doesn't need an increase in price - it is a good offer as it stands," said Mr Chapman.

But some analysts believe BG has some room to manoeuvre.

"Some Origin shareholders will be thinking long and hard about this," said Gavin Wendt, an analysts at Fat Prophets Fund management.

"This may not be the last offer on the table," he added.

Origin has doubled its estimates of gas reserves and estimated a 121% increase in its coal seam methane reserves.

It plans to use gas reserves in eastern Australia to feed a proposed Liquefied Natural Gas (LNG) facility that would supply utilities in Northern Asia.

Origin's estimates of the worth of its reserves were also influenced by news that Malaysian oil firm Petronas was paying $2.5bn for a 40% stake in a liquefied natural gas plant in Queensland planned by rival Australian energy firm Santos.

Australia's Origin rejects BG bid
30 May 08 |  Business
BG bids for Australia energy firm
30 Apr 08 |  Business
Liquefied natural gas boosts BG
03 Apr 06 |  Business
Oil price helps BG double profit
09 Feb 06 |  Business

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