BG Group Gets Greenlight for $3.48B Takeover of Queensland Gas Co.
BG Group and Queensland Gas Company Limited have announced that they have agreed to the terms of a recommended transaction under which BG Group will offer to acquire all the issued shares in QGC at AUD$5.75 per share by means of an unconditional on-market takeover bid on the Australian Securities Exchange (ASX). The all-cash offer values the entire issued share capital of QGC at approximately AUD$5.6 billion (£2.2 billion). BG Group’s consideration to increase its ownership of QGC to 100%* will total some AUD$5.2 billion (£2.0 billion).
- The offer price represents an 80% premium to QGC's closing price of AUD$3.20 on October 23, 2008, the last full day of trading in QGC shares prior to the two companies' announcement published today on ASX at 1030 AEDT October 28, 2008 (2330 GMT October 27, 2008). The offer price is final and will not be increased in the absence of a superior proposal.
- The QGC Voting Directors** unanimously recommend that QGC shareholders accept BG Group's offer in the absence of a superior proposal. On the same basis, the Voting Directors who hold or control QGC shares have indicated that they intend to accept BG Group's offer in respect of the entirety of their shareholdings in QGC. Those holdings (excluding the shares held by the QGC Chairman and Managing Director that are the subject of the pre-bid agreements referred to below) amount to, in aggregate, 7.1% of the issued share capital of QGC.
- BG Group has pre-bid agreements to acquire the entire shareholdings of QGC's two largest institutional investors, ANZ Infrastructure Services Pty Ltd and Sentient Group, as well as pre-bid agreements to acquire certain shares held by QGC Chairman Robert Bryan and QGC Managing Director Richard Cottee. Those agreements, combined with BG Group's existing stake***, take BG Group's relevant interest in QGC to 17.1%.
- In addition, as of the close of trading on ASX on 28 October 2008, BG Group's wholly-owned Australian subsidiary, BG International (AUS) Investments Pty Limited (“BG AUS”), had acquired more than 100 million shares in QGC at the offer price, representing 10.9% of QGC issued share capital.
- AGL Energy has indicated that it intends to sell its 22% shareholding in QGC into BG Group's recommended takeover bid in the absence of a superior offer for the entirety of QGC. Separately, AGL has also entered into an option agreement with BG AUS, detailed later in this announcement.
- BG Group estimates that its existing shareholding in QGC, taken together with QGC shares acquired in trading on ASX today (October 28, 2008) and QGC shares that are subject to pre-bid acceptances and declarations of intention from shareholders, now accounts for a total of up to 57.0% of all the issued share capital in QGC.
- BG Group has received advice from the Australian Foreign Investment Review Board that there are no objections to the Group’s plans to acquire 100% of QGC.
- BG Group intends to retain and further develop the QGC brand, management and staff.
QGC Chairman Robert Bryan said, "In the eight years since QGC was founded, the Company has prospered beyond our most optimistic expectations, delivering very significant value to shareholders. The next phase of QGC's evolution would require a step-change in the Company's skills base, organisational resources and balance sheet capacity. 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.
"This offer represents a full and fair premium for QGC shareholders. Given this, the Voting Directors have unanimously decided to recommend BG Group's offer, which the Board regards as an excellent outcome for QGC's many supporters."
QGC Managing Director Richard Cottee said, "BG Group's unconditional all-cash offer is an attractive reward for our loyal shareholders. It is appropriate that I am today to be a cornerstone seller into this on-market offer. QGC is a world-class coal seam gas producer. BG Group is a world leader in natural gas, with a very strong track record in exploration, production and liquefied natural gas (LNG), as well as superb project management skills. This transaction will meld two specialist skill sets to create the only seamless, vertically-integrated LNG proponent in Eastern Australia.
"BG Group and QGC are absolutely dedicated to ensuring the success of the Queensland Curtis LNG Project -- and the jobs and revenues for Queensland that the project represents. It is clear that BG Group has the market knowledge, global experience and financial muscle to make one of Australia's largest capital infrastructure projects happen over the next five years.
"We are tremendously proud of everything QGC has achieved in its maturation from junior explorer to a leader in the coal seam gas sector. The technical expertise of our outstanding staff has underpinned that transformation, creating a lasting legacy of jobs, wealth and cleaner energy as part of our major contribution to the community. I believe QGC will continue to prosper as BG Group expands on our vision of creating a world-class energy facility in Queensland."
BG Group Chief Executive Frank Chapman said, "This transaction brings together two highly successful companies with complementary skills and assets and a shared focus on the creation of long-term value for shareholders. Our offer builds on the successful alliance between BG Group and QGC, which has already led to the establishment of effective collaborative relationships at all levels.
"Establishing a single integrated organisation within a one-company ownership structure allows BG Group to optimize the development of the LNG scheme as well as expand QGC's resource base for the supply of both domestic and export markets. The benefits arising from this transaction accrue to both sets of shareholders, with BG Group gaining the opportunity to invest in the longterm growth of upstream production and LNG liquefaction, and QGC shareholders gaining a certain and fair cash premium."
It is anticipated that there will be an immaterial impact on earnings per share until the Queensland Curtis LNG Project begins production, after which the acquisition is expected to be earnings accretive for BG Group.
The transaction is driven by several strategic factors. It would:
- Establish a material BG Group business in Australia – a stable and attractive OECD investment environment;
- Mark a step-change in the scale of BG Group's Asia-Pacific business, with undeveloped resource potential located close to valuable domestic and regional markets;
- Enhance BG Group's global LNG position by securing new equity supplies from the Queensland Curtis LNG Project; and
- Offer a key opportunity to extend QGC's industry-leading coal seam gas (CSG) skills internationally, as access to conventional hydrocarbon sources becomes increasingly challenging and resource holders seek partners with expertise in the development of unconventional gas alternatives.
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