29/01/2018 - 15:33

AWE soars on Mitsui offer

29/01/2018 - 15:33

Bookmark

Save articles for future reference.

Shares in AWE jumped 16.5 per cent today after Japanese group Mitsui & Co became the third bidder for the oil and gas producer, which is the operator and half owner of the Waitsia gas field north of Perth.

AWE soars on Mitsui offer
AWE's most valuable asset is the Waitsia gas field in the Perth basin.

Shares in AWE jumped 16.5 per cent today after Japanese group Mitsui & Co became the third bidder for the oil and gas producer, which is the operator and half owner of the Waitsia gas field north of Perth.

AWE shares closed at 99 cents, notably above the 95 cents cash offer lobbed by Mitsui this morning.

Mitsui has trumped a bid by Mineral Resources pitched at 83 cents per share, which has been supported by the AWE board.

That followed an initial move by China Energy Reserve and Chemical Group (CERCG Australia), which has lodged a bid at 73 cents per share.

Waitsia is considered the largest onshore gas discovery in Australia in the past 40 years.

Its co-owner is Origin Energy spin-out Lattice Energy, which is being acquired by Kerry Stokes-backed Beach Energy.

Beach’s acquisition of Lattice is due to close this week (on January 31), raising the possibility of even more takeover action surrounding Waitsia.

In a research note, RBC analyst Ben Wilson said the Mitsui cash bid was relatively clean.

“While there is a break fee of $A5.2 million potentially payable by AWE to MinRes, our reading of the scheme deed suggests this may not be payable in the event of a superior proposal and in any case it is minor in the context of the quantum of the bid,” he said.

Mr Wilson said that, according to the scheme implementation deed, MinRes had three business days to counter with a revised offer that was at least no less favourable than the Mitsui bid in order to retain the AWE board recommendation.

Mitsui’s proposal values AWE’s fully diluted issued share capital at $A602 million.

The Japanese group said it would be non-binding until AWE terminated the MinRes takeover scheme and its directors agreed to unanimously recommend acceptance of the Mitsui proposal to its shareholders.

Mitsui said it was envisaged its proposal would be implemented by way of an off-market takeover offer to AWE shareholders, conditional upon 50.1 per cent minimum acceptances.

The proposal is not subject to a due diligence condition and Mitsui has obtained Foreign Investment Review Board (FIRB) approval.

“The proposed acquisition of AWE is consistent with Mitsui’s ongoing strategy to invest in high-quality oil and gas assets in Australia,” the company said

“In particular, Mitsui believes AWE’s interest in the Waitsia gas project has the potential to be an attractive source of future gas supply to a wide range of Western Australian gas customers.”

Mitsui, through its wholly owned subsidiary Mitsui E&P Australia, and AWE have had a commercial relationship for more than 15 years, built through their current joint venture interests in the Casino Gas Project in Victoria and Petroleum Exploration Permit 55768 in New Zealand, and previous joint venture partnership in the Tui Project in New Zealand.

Through their subsidiaries, Mitsui and AWE were also previous joint venture partners in the Cliff Head project in Western Australia and the BassGas Project in Victoria.

Mitsui has extensive interests in WA, spanning iron ore, energy, forestry, woodchips and salt production.

It is a 50:50 joint venture partner with Mitsubishi in Japan Australia LNG (MIMI), which holds a one-sixth interest in the North West Shelf Project, and approximately 14 per cent of the Browse Project.

Mitsui has appointed Rothschild (financial adviser), Herbert Smith Freehills (legal adviser) and Citadel-Magnus (public relations) in relation to the AWE proposal.

 

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options