Shareholders in Queensland Gas are doing very well: the company has just received another takeover offer, taking the number of full offers to three and ‘deals’ to one.
Sounds confusing. It should. There have been two bids from Santos, both now abandoned after the ACCC said no. AGL Energy has THE deal on the table at the moment which would give it a 27.5 per cent stake in exchange for long term gas supply contract.
And now US investment firm The TWC Group has launched an $812 million takeover bid for QGC.
The offer is well-timed, coming just two days before the QGC shareholders meeting tomorrow to discuss and approve or say no to the AGL deal, which is valued at around $292 million for the share deal.
After the TWC offer, Friday’s meeting might be off.
TWC is offering QGC shareholders $1.51 per share in cash or preference shares or a combination of each.
QGC shares rose in yesterday’s sell off to finish 18.5c higher at $1.54.5c on more than 11.5 million shares.
The cash offer will be tasty for shareholders after the sell down yesterday which has made investors twitchy.
Cash in the hand beats future promises in unsettled times, capital gains tax and all!
TWC said its offer was within a value range provided by an independent expert and represents an 11 per cent premium to QGC’s closing share price on Tuesday.
TWC, which has about $150 billion in assets under management, said its offer was superior to a proposal for QGC by AGL Energy.
“Our offer provides QGC shareholders with superior value and allows QGC shareholders the opportunity to participate for all of their shares, unlike the AGL proposal, which only included a limited 12.5 per cent buyback option,” TWC managing director Blair Thomas said in a statement.
QGC previously backed a proposed $292 million deal with AGL that would involve AGL taking a 27.5 per cent in QGC.
Last week, oil and gas producer Santos dropped its bid for QGC, which would have resulted in the creation of a “new” QGC, after opposition from the competition watchdog.
Santos kicked off the bidding at $1.26 a share which was too low; AGL slipped in with the placement/contract deal that sort of put a price of around $1.44 a share on QGC.
Santos then recast its offer into an old QGC/new QGC which it said effectively valued the company at around $1.80 a share (the ‘new’ company would be spun off, with Santos taking a large but not controlling stake).
The basic offer though was $1.30 a share and the promise of the spin off. The ACCC knocked that on the head so now TWC appears to have the upper hand.
TWC said it has an investment plan for QGC’s Undulla Nose coal seam assets and intends to ensure that QGC’s gas resources are commercialised soon.
“In addition to the development of QGC’s reserves, we will seek to address existing infrastructure bottlenecks that inhibit efficient development of Eastern Australian gas markets,” Mr Thomas said.
TWC said under its offer, QGC shareholders can receive their consideration in the form of 10 per cent preference shares that can be put into the company for one year.
If they elect to receive cash, they can also receive a maximum of 25 per cent of their consideration as preference shares instead.
TWC’s offer is subject to conditions including a minimum of 50.1 per cent acceptances.
Los Angeles-based TCW, which has about A$150 billion of assets under management, claims to be one of the biggest investors in coal seam methane in the world.
The company’s energy and infrastructure unit has more than $7.4 billion invested in more than 190 energy projects and owns stakes in five large coal seam gas operations, mostly in the U.S. and Canada. This deal, if successful, would be around 10 per cent of that total. TWC is part of the asset management arm of the European bank, Societe Generale.