By Angela Macdonald-Smith
Oct. 28 (Bloomberg) -- BG Group Plc, the third-biggest U.K. oil and gas producer, agreed to pay A$5.2 billion ($3.1 billion) to buy the rest of Queensland Gas Co., gaining full control over their planned liquefied natural gas venture in Australia.
BG, which already holds 9.9 percent of the Brisbane-based company, will pay A$5.75 a share in cash, 80 percent more than the last closing price of A$3.20, BG and Queensland Gas, or QGC, said today in a joint statement to the Australian stock exchange. Queensland Gas shares surged to match the offer price in Sydney.
BG last month failed in a A$13.5 billion offer for Origin Energy Ltd., Australia's biggest producer of natural gas from coal seams, after Origin drew an investment of as much as $8 billion from ConocoPhillips. The U.K. company has already built up a 20 percent interest in some of Queensland Gas's assets as it boosts gas reserves to tap rising demand in North Asia.
``Backed by a strong management team, QGC has become a hero on the back of an outstanding coal-seam gas reserve,'' Macquarie Group Ltd. analysts said in an Oct. 24 report. ``It is the largest pure-play coal-seam gas producer in Australia.''
BG has agreements to buy the shares held by Queensland Gas's two biggest institutional investors, ANZ Infrastructure Services Pty and Sentient Group, as well as shares owned by Queensland Gas's chairman and managing director, giving it a 17.1 percent interest. AGL Energy Ltd., Queensland Gas's biggest shareholder, said it intends to sell its 22 percent stake for A$1.18 billion in the absence of a higher offer.
LNG Project
Queensland Gas jumped to A$5.75 at 11:17 a.m. in Sydney trading, while AGL advanced 4.5 percent to A$14. BG slumped 7.4 percent in London yesterday, extending a 7.4 percent drop on Oct. 26.
BG and Queensland Gas are proposing to build an A$8 billion LNG project near Gladstone on the Queensland coast to tap rising demand for cleaner-burning fuel in Asia. Global LNG demand may rise 10 percent a year through 2015, more than five times the estimated gain in crude-oil use, Citigroup Inc. said in April.
``Establishing a single integrated organization within a one-company ownership structure allows BG Group to optimize the development of the LNG scheme,'' BG Chief Executive Officer Frank Chapman said in the statement.
BG is being advised by JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley. Queensland Gas is being advised by Austock Corporate Finance Pty and ABN Amro Morgans Corporate Ltd.
Access to Gas
Sydney-based AGL Energy, Australia's biggest electricity and gas retailer, will get access to gas reserves as part of the agreement to sell its stake to BG. AGL will have the right to buy 1.07 petajoules of proven, probable and possible gas reserves, in addition to exploration acreage, AGL said in a separate statement to the exchange. It also has the right to buy the gas-fired Condamine power station in Queensland and a related 10 petajoules-a-year gas supply contract.
Like Origin, Queensland Gas owns coal-seam gas fields in Queensland state. It has been increasing reserves by bidding for smaller rivals, including Sunshine Gas Ltd. and Roma Petroleum NL. BG already has initial approval for the takeover from Australia's Foreign Investment Review Board.
The offer is final in the absence of a higher competing bid, BG Chief Financial Officer Ashley Almanza said on a conference call.
``While QGC's deepening relationship with BG Group has been fruitful and positive, it has also clearly revealed the opportunity to create additional value through efficiencies from the integration of the two companies' assets and skills under single-company ownership,'' Queensland Gas Chairman Robert Bryan said in the statement. ``The offer represents a full and fair premium for QGC shareholders.''
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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