30th May 2008 07:00
BG Group's proposed offer to acquire Origin Energy
On 30 April 2008 BG Group advised the London Stock Exchange that it had approached the Board of Origin Energy Limited ("Origin" - ASX:ORG) with an all-cash proposal to acquire all of Origin's issued ordinary shares at A$14.70 per share.
On 28 May 2008 Origin confirmed in writing that its Board had concluded that BG Group's revised cash offer of A$15.50 per share, to be implemented through a scheme of arrangement, should be put to Origin shareholders. Until yesterday, negotiating teams from the two companies were actively engaged in putting the final touches to the agreement governing the transaction, the Scheme Implementation Deed. BG Group was therefore surprised to learn, earlier today, that Origin had broken off discussions.
BG Group confirms that, prior to 28 May 2008, it had received from Origin a draft copy of their recently commissioned report into reserves, resources and prospects in coal seam gas. Following a careful review, BG Group concluded that the draft report's assumptions and conclusions were unrealistic. BG Group wrote to Origin advising that the draft report did not change BG Group's views on value. In response to the letter from BG Group, Origin confirmed the Origin Board's decision to proceed with the BG Group proposal at A$15.50 per share, subject to finalisation of the Scheme Implementation Deed.
Origin disclosed to BG Group on 29 May 2008 that a significant number of their coal seam gas tenements in Queensland are subject to rights of third parties to a retransfer of up to 45% of Origin's interest in those tenements. These reversionary rights have since been referred to by Origin in its announcement today (30 May 2008).
BG Group further notes that its proposition to Origin is based upon an integrated energy strategy, valuing the growth potential of all segments of Origin's business. There is an abundance of new gas supply in Eastern Australia. BG Group's value case involves the production and export of gas reserves to global LNG markets - a business in which BG Group is well established - as well as a commitment to develop the domestic market.
Global LNG markets are in transition. To add value in this market requires skills in LNG, established relationships, a low-cost structure, and speed to market, particularly in the context of Eastern Australia. BG Group's proposed premium to Origin's shareholders values this LNG opportunity together with those accruing in the downstream business segments at some A$ 4.4 billion.
BG Group's proposal of A$15.50 per share represents a premium of 48% above the Origin share price at close of trading on 29 April 2008. It offers a premium of 59% above the undisturbed 30-day volume-weighted average share price (VWAP) to 29 April 2008 and a premium of 71% above the undisturbed 90-day VWAP to 29 April 2008.
BG Group's proposal delivers full and certain value today to Origin's shareholders and removes the considerable technical, project and commercial risk which Origin would face in pursuing an LNG scheme.
In the light of these developments, BG Group is now considering its options.
Ends.
Notes for Editors
About BG Group
BG Group plc (LSE: BG.L) is a world leader in natural gas, with a strategy focused on connecting competitively-priced resources to specific, high-value markets. Active in 27 countries on five continents, BG Group has a broad portfolio of exploration and production, Liquefied Natural Gas (LNG), transmission and distribution and power generation business interests. It combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves.
Contacts
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+44 (0) 118 929 3508
+44 (0) 118 929 3110
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There are matters discussed in this media information that are forward looking statements. Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors which could cause actual results to differ from the forward looking statements, refer to the Company's annual report and accounts for the year ended 31 December 2007. The Company does not undertake any obligation to update publicly, or revise, forward looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Goldman Sachs International, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for BG Group plc and no one else in relation to the proposed transaction and will not be responsible to anyone other than BG Group plc for providing the protections afforded to clients of Goldman Sachs International nor for giving advice in relation to the proposed transaction or any other matters referred to in this announcement.
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