Origin Energy rejects BG £7bn bid

19-08-2008

Origin Energy rejects BG £7bn bid
Origin Energy is calling on shareholders to reject a £6.7 billion bid for the firm from BG Group.

The Australian gas firm says the BG offer undervalues its business and prospects.

Kevin McCann, Origin chairman, explained, while BG is offering A$15.50 (£7.22) cash per share, the average broker 12 month share price targets range from A$17.01 to A$20.00 and the share price has been over the offer price since the bid was first announced.

He said: "Origin has outstanding prospects as a strongly performing Australian integrated energy company with increasing exposure to growing demand and higher prices for Australia’s natural resources.

"Directors believe it is in shareholders' best interests to reject BG's offer."

However, BG has rejected suggestions its bids undervalue the firm.

Frank Chapman, BG chief executive, said: "Origin has rejected BG Group's offer but has comprehensively failed to justify its position.

"We remain confident our offer represents full and fair value for Origin's shareholders."

He added the BG offer price was at a 72 per cent premium over the average share price for the 90 days before the first takeover bid announcement was made.

"Origin's response lacks any substance or clarity," Mr Chapman said.

"Origin's directors simply assert that BG all-cash offer undervalues the company, but there is no evidence… to support this view."

BG Group was formed in 1997 following the demerger of Centrica from the former British Gas – originally privatised in 1986.

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