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Mineral Resources trumps Chinese bid for Australian gas producer AWE

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Reuters are reporting that Australia’s Mineral Resources has offered AUS$484 million for domestic gas producer AWE Ltd, topping a sweetened bid from state-owned China Energy Reserve and Chemicals Group (CERCG).

The two suitors are targeting AWE’s stake in a gas project in Western Australia, Waitsia, which the company has called the country’s biggest conventional gas find onshore in four decades.

Mineral Resources, a provider of mining infrastructure, made an all-scrip offer worth AUS$0.80 a share based on its closing price on 8 December, a 47% premium to AWE’s last trade before it revealed on 30 November that it had received an offer from CERCG.

CERCG on 8 December raised its all-cash offer slightly to AUS$0.73 a share, going straight to shareholders after AWE rebuffed a friendly approach.

AWE told shareholders on 11 December to take no action while it weighed the two offers. Its shares jumped 15% to trade above both offers at AUS$0.84, their highest level since August 2016.

Both offers are well below a valuation of AUS$0.91 from analysts at Royal Bank of Canada, which ran a recent share sale for AWE.

Shares in Mineral Resources, which has offered one of its shares for every 22.33 AWE shares, fell 4.8% after the bid was announced.

Mineral Resources said the acquisition would help it secure energy supplies for its own operations.

CERCG said on 11 December that it is mainly looking to supply gas to remote communities and mine sites in Australia using its technology to liquefy gas, transport it in containers and regasify it in areas not connected to pipelines.

However it is also considering shipping LNG in containers to Australia’s east coast, where gas prices have soared due to the start-up of three gas export plants and rising demand for gas-fired power.

AWE rejected a AUS$750 million scrip-based offer from Senex Energy in 2013 before oil prices collapsed and a AUS$421 million approach from US private equity firm Lone Star last year.

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