Origin urges rejection of BG bid

Origin is seeking other offers for its coal seam gas assets

Australian energy firm Origin has again urged shareholders to reject a 13.8bn Australian dollar ($13.1bn; £6.7bn) takeover bid from UK rival BG Group.

Reiterating its stance from July, Australia's second-biggest energy firm said BG's offer price of A$15.50 undervalued Origin and its prospects.

But BG boss Frank Chapman, leading the hostile bid, said: "Origin's response lacks any substance or clarity."

And he said there was no evidence to support the view BG undervalued Origin.

Coal seam gas

"Nor is there any forecast or other financial information which could assist shareholders in valuing the company and making a timely and informed decision," added Mr Chapman, who is BG's chief executive.

BG said in June it would go directly to Origin's shareholders after the board rejected a friendly bid of A$15.50 a share in May.

"Origin is a strongly performing, Australian integrated energy company with an impressive track record of growth," its chairman Kevin McCann said in a statement on Tuesday.

Origin has developed the leading position in coal seam gas (CSG) in Australia and the strength of this position will be a key driver for continuing growth."

Mr McCann said Origin had a number of potential partners interested in extending development of the CSG reserves.

Origin also said it would provide shareholders with an independent valuation report containing "all relevant information about Origin's value and prospects" before BG's offer closes on 26 September.

But BG's Mr Chapman said: "Origin has failed to demonstrate any confidence that the coal seam gas 'monetisation' process will yield superior value for its shareholders."

He also said that it was BG's bid that was holding Origin's share price at slightly higher than the A$15.50 offer.

'Early days'

BG went hostile with its all-cash offer on 24 June after an agreed deal was rejected by Origin at the last minute.

The offer is at a 48% premium to Origin's closing share price on 29 April, before the move was announced.

"There's a sense that Origin has gotten quite a positive response on its CSG monetisation process, but that's still in early days, so it's hard to decide which is a better option," said Jason Mabee, a utilities analyst at ABN Amro.

"It's difficult to say what BG might do. There's a high chance they will wait until they get more details on the CSG monetisation proposals Origin has received, but they could also make a pre-emptive strike and launch a higher offer."