Business | Oil & Gas
Origin fears BG's hostile offer will hurt profits
Origin Energy, Australia's biggest producer of gas from coal seams, forecast slower profit growth in the coming year as it fights a A$13.7 billion ($12 billion) hostile takeover bid from BG Group.
- Bloomberg
- Published: 23:44 August 28, 2008
Sydney: Origin Energy, Australia's biggest producer of gas from coal seams, forecast slower profit growth in the coming year as it fights a A$13.7 billion ($12 billion) hostile takeover bid from BG Group.
Per-share earnings before one-time items should rise by at least 10 per cent in the year ending June 30, 2009, boosted by the start of production at gas and power projects, Sydney-based Origin said yesterday in a statement. That compares with 14 per cent growth on that basis in the previous year.
Managing director Grant King has urged shareholders to reject BG's offer, saying they will benefit more from a planned Queensland coal-seam gas partnership. Reading, UK-based BG wants to buy Origin to add reserves for an A$8 billion project in Australia to export fuel to Asia and says its offer provides shareholders with "full value" and the certainty of cash.
"The guidance if anything looks a tad on the low side, which is a bit surprising given the position they are in," said Paul Johnston, a utilities analyst at Commonwealth Securities.
No effect
The forecast won't affect whether Origin manages to fend off BG because that hinges on the value of the proposed coal-seam gas venture, he said.
BG's offer is due to close on September 26 and Origin has said it will present shareholders with details of its proposed coal- seam gas partnership at least a week beforehand to give them time to decide on their preferred option.
Origin Energy gained as much as nine cents, or 0.6 per cent, to A$16.10 in Sydney trading on the Australian Stock Exchange.
The shares, which were at A$16.03 at 12.35 pm local time, have traded above BG's A$15.50 offer since it was made, signalling some investors expect a higher bid.
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