AWE Auction Heats Up
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There’a nice little auction now under way for mid range oil and gas producer, AWE.
It has already rejected an offer from a Chinese group, and decided to fall into bed with miner, Mineral Resources.
Now there’s a higher non binding $600 million ‘offer’ from Japanese trading house giant, Mitsui & Co which is offering 95 cents a share cash which if it proceeds will top the $526 million 83 cents (cash and shares) a share deal the oil and gas producer sealed with Mineral Resources (http://www.awexplore.com/irm/PDF/2846_0/AWEreceives095persharecashproposalfromMitsui).
The original bid from China Energy Reserve and Chemicals Group at 73 cents a share has gone by the wayside.
Describing the latest offer as “unsolicited, non-binding and conditional”, AWE said the proposal is not conditional on due diligence, financing or regulatory approval but does require the AWE deal with MinRes to be terminated by the close of business on February 2 (this Friday).
It also requires AWE directors to unanimously recommend acceptance of the Mitsui proposal in the absence of a higher one.
As the deal is an off-market takeover bid, it only requires a minimum of 50.1% of shareholder acceptance to pass. AWE said its board will evaluate the Mitsui proposal but recommended shareholders take no action until they receive further advice.
AWE said "Mitsui has advised that the Mitsui Proposal is currently non-binding, and until the MinRes scheme implementation deed is terminated, and a binding bid implementation deed is entered into between Mitsui and AWE and announced to the ASX, the Mitsui Proposal does not constitute a public proposal to make a takeover bid for the purposes of the Corporations Act.”
AWE shares leapt more than 16% to 99 cents as speculators punted on a counter offer from either Mineral Resources or the Chinese underbidder.
The attraction is AWE’s most valuable asset, the Waitsia gas field in the Perth basin which the company says the field is the largest onshore gas discovery in Australia for 40 years and has the capability to supply about 10% of Western Australia’s domestic market needs.
AWE also has interests in the BassGas and Casino projects off Victoria and 50% of the Santos-run Ande Ande Lumut oilfield in Indonesia.
Reuters says Mitsui has worked closely with AWE on other gas projects in Australia and New Zealand and is also a stakeholder in major liquefied natural gas projects, as well as coal and iron ore mines.
“The Japanese firm had considered bidding with AWE for Origin Energy’s 50% stake in the Waitsia field when it was put up for sale in 2016, industry sources said, so it knows the asset and has not sought to inspect AWE’s books.,” Reuters reported.
Beach Energy, which is controlled by Kerry Stokes’ Seven Group Holdings owns the other 50% of Waitsia. What will be interesting if there are any change of ownership provisions in the joint venture agreement between Beach and AWE for Waitsia.
If there are, Mitsui or a winning bidder for AWE might not get the prized asset if Beach considers them to be hostile.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.