Origin rejects BG £6.7bn offer

Friday, 04 July 2008 12:00

Australian energy group Origin Energy today advised shareholders to reject a £6.7 billion bid from the UK's BG Group.

The board of Origin Energy now intends to recommend that shareholders reject BG's bid of AU$15.50 cash per share.

Origin chairman Kevin McCann said the offer did not take into account a continued strong interest in the coal seam gas (CSG) and the sudden hikes in oil prices.

The firm has recently received a report highlighting a significant increase in reserves and contingent resources.

Furthermore, Mr McCann stated a recent acquisition of a gas-fired power station for AU$700 million "creates significant value for shareholders".

However, BG has claimed Origin is over-egging their CSG position.

BG Group chief executive Frank Chapman said: "It remains the case that Origin must spend a significant amount of time and money to prove up its CSG potential. Origin continues to lag its competitors in the exploration and appraisal of its CSG acreage."

He added: "Our offer is not focused solely on Origin's coal seam gas resources. We wish to retain and invest in all of Origin's businesses in Australia - from gas resources and power generation through to retail gas and electricity marketing."

At 10:30, the BG Group share price fell 0.90 per cent to 1207p.

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