Mineral Resources trumps Chinese bid for AWE

Mineral Resources trumps Chinese bid for AWE

Mon, 11/12/2017 - 10:53

AWE's Waitsia gas prospect in the Perth Basin is attracting significant interest. Photo: AWE

Mineral Resources has moved to trump China Energy Reserve and Chemical Group in a pursuit of oil and gas hopeful AWE, lodging a rival bid valuing the target at more than $484 million.

Perth-based Mineral Resources today confirmed it had lodged an all-scrip proposal to acquire all of the shares in AWE, whose key asset is the its Waitsia gas venture in the onshore Perth Basin.

The offer, which was lodged after market close on December 8, comprises one Mineral Resources for every 22.325 shares in AWE held, equating to a value of 80 cents per AWE share.

In a statement to the ASX, Mineral Resources said the potential acquisition would fit with the company’s clean energy strategy, including the use of LNG plants to provide power solutions to a wide range of users.

Mineral Resources said it would not sell any of the gas from the WAitsia project offshore if it was successful in its bid, as part of its commitment to supplying the domestic market.

“Australia is a large consumer of domestic gas in its own right, with such consumption to grow considerably as MRL’s previously announced processing and infrastructure projects come online,” the company said in an ASX announcement.

Macquarie Capital is acting as Mineral Resources’ financial adviser, while Gilbert + Tobin is providing legal advice.

Mineral Resources today said it had already undertaken significant due diligence on AWE’s Waitsia and Beharra Springs assets, during the Origin Energy divestment process in 2016.

“Over recent weeks MRL invested considerable time analysing and understanding the key aspects of the AWE business based on publicly available information,” the company’s statement said.

“As a result, the board of Mineral Resources was satisfied the proposal did not need to be subject to due diligence.”

Mineral Resources bid value of 80 cents per share is a premium to CERCG’s second offer for AWE, which was announced on Friday last week.

CERCG’s all-cash offer comprised 73 cents per AWE share and was 2 cents per share higher than its initial offer for the company, which it withdrew last week after it was unable to perform due diligence on the target.

Responding to Mineral Resources' announcement, CERCG business manager Kevin Gao said the company's offer represented certainty of value for AWE shareholders.

"Our cash offer can be executed and delivered to AWE shareholders more quickly than a scheme," Mr Gao said.

"Shareholders can then deploy or reinvest their cash proceeds as they see fit, according to their own needs and investment risk profile."

As well as interest from CERCG and Mineral Resources, AWE attracted a $421 million bid from US-based private equity group Lone Star in 2016.

AWE shares gained 16 per cent on the ASX today, finishing to trade at 84.7 cents.