PERTH - Britain's BG Group Plc (BG.L) has offered A$796 million ($538 million) for Australia's Pure Energy Ltd (PES.AX), trumping a bid by Arrow Energy Ltd (AOE.AX), in the latest deal in Australia's coal seam gas sector as firms seek to boost their gas reserves.
BG, in its third acquisition foray in Australia, said on Monday its all-cash bid was A$6.40 a share, a 19 percent premium to the implied value of Arrow's cash-and-scrip offer of A$5.39 per share on February 6.
With Arrow Energy holding a 19.9 percent stake in Pure and BG having also acquired about 10 percent of Pure, analysts said it was tough to tell if there would be a bidding war for Pure.
"Its hard to say if Arrow will up its offer," said Chris Brown, an oil and gas analyst at ABN AMRO in Sydney. "Arrow needs the gas for the LNG project but it will have to be mindful of the total cost."
Analysts have said that Australia's three proposed coal seam gas-fueled LNG projects in Queensland state are headed for consolidation as rivals seek the most profitable way of developing their respective projects.
BG said the offer was also a 115 percent premium to Pure's closing share price of A$2.98 on December 19, the last full day of trading before Arrow's offer was announced.
Arrow Energy in December offered A$2.70 in cash plus 1.21 Arrow shares for every Pure share.
Pure Energy, which has previously recommended Arrow's offer, said it was reviewing BG's proposal and asked shareholders to take no action.
Shares in Pure Energy, currently on a trading halt, closed at A$5.28 on Friday. Arrow, Royal Dutch Shell's (RDSa.L) joint venture partner in Australia, closed 11.7 percent higher at A$2.48, after spiking as much as 20 percent to one-month high of A$2.67.
"Arrow may sell its stake and pocket the money but there is some speculation that Arrow may also become a takeover target," said another analyst, who asked not to be identified because of company policy.
Global energy majors are targeting coal seam gas, which is found in underground coal deposits, as a new feedstock for liquefied natural gas (LNG) plants.
LNG demand is forecast to more than double by 2020, driven by an increase in energy consumption and demand for cleaner burning fuels.
"BG Group's offer gives Pure shareholders the certainty of cash at a time of heightened uncertainty in world equity and financial markets," BG said in a statement.
BG bought its LNG joint-venture partner Queensland Gas Ltd for A$5.6 billion last year after an earlier unsuccessful attempt to acquire Origin Energy Ltd (ORG.AX).
Origin rejected BG's offer and sold 50 percent of its coal seam gas reserves to U.S. energy major ConocoPhillips (COP.N) in an $8 billion joint venture deal that implied a much higher value to Origin.
BG, in its third acquisition foray in Australia, said on Monday its all-cash bid was A$6.40 a share, a 19 percent premium to the implied value of Arrow's cash-and-scrip offer of A$5.39 per share on February 6.
With Arrow Energy holding a 19.9 percent stake in Pure and BG having also acquired about 10 percent of Pure, analysts said it was tough to tell if there would be a bidding war for Pure.
"Its hard to say if Arrow will up its offer," said Chris Brown, an oil and gas analyst at ABN AMRO in Sydney. "Arrow needs the gas for the LNG project but it will have to be mindful of the total cost."
Analysts have said that Australia's three proposed coal seam gas-fueled LNG projects in Queensland state are headed for consolidation as rivals seek the most profitable way of developing their respective projects.
BG said the offer was also a 115 percent premium to Pure's closing share price of A$2.98 on December 19, the last full day of trading before Arrow's offer was announced.
Arrow Energy in December offered A$2.70 in cash plus 1.21 Arrow shares for every Pure share.
Pure Energy, which has previously recommended Arrow's offer, said it was reviewing BG's proposal and asked shareholders to take no action.
Shares in Pure Energy, currently on a trading halt, closed at A$5.28 on Friday. Arrow, Royal Dutch Shell's (RDSa.L) joint venture partner in Australia, closed 11.7 percent higher at A$2.48, after spiking as much as 20 percent to one-month high of A$2.67.
"Arrow may sell its stake and pocket the money but there is some speculation that Arrow may also become a takeover target," said another analyst, who asked not to be identified because of company policy.
Global energy majors are targeting coal seam gas, which is found in underground coal deposits, as a new feedstock for liquefied natural gas (LNG) plants.
LNG demand is forecast to more than double by 2020, driven by an increase in energy consumption and demand for cleaner burning fuels.
"BG Group's offer gives Pure shareholders the certainty of cash at a time of heightened uncertainty in world equity and financial markets," BG said in a statement.
BG bought its LNG joint-venture partner Queensland Gas Ltd for A$5.6 billion last year after an earlier unsuccessful attempt to acquire Origin Energy Ltd (ORG.AX).
Origin rejected BG's offer and sold 50 percent of its coal seam gas reserves to U.S. energy major ConocoPhillips (COP.N) in an $8 billion joint venture deal that implied a much higher value to Origin.
