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BG Launches Rival Bid for Pure Energy



SYDNEY — U.K.-based BG Group PLC Monday launched a rival takeover bid for Pure Energy Resources Ltd., opening another front in the battle for Australia’s rich coal seam gas reserves.

The 796 million Australian dollar (US$533.3 million) all-cash bid trumps an existing cash and share offer from Arrow Energy Ltd., which is Royal Dutch Shell PLC’s joint venture partner in Australia.

Pure’s board, which has previously endorsed Arrow’s offer, said it is reviewing BG’s bid and urged its shareholders to take no action until it makes a further recommendation.

A host of Australian oil and gas companies and their newfound international joint venture partners are competing for CSG reserves. They need them to feed four separate liquefied natural gas export terminals, planned to be built at the port town of Gladstone on the coast of Queensland state.

In response to BG’s bid of A$6.40 cash per Pure share, Arrow stood by its original offer of A$2.70 cash plus 1.21 of its shares for every Pure share, but wouldn’t say whether it was prepared to raise it.

At the close of trading Monday, Arrow’s offer was valued at A$5.70 a Pure Share, or A$709 million.

“We have presented a compelling offer to Pure shareholders, including Arrow scrip, which is significantly undervalued, particularly if you use the BG offer for Pure as a valuation guide,” said Arrow Managing Director, Nick Davies.

BG said its offer represented a 19% premium to the implied value of Arrow’s offer at the close of trade Friday, and that it has already acquired a relevant interest in Pure of about 10%. That’s enough to block Arrow’s bid for Pure, which has a 90% minimum acceptance level.

Arrow already owns 20% of Pure and noted that BG’s offer has a 50.1% minimum acceptance level and would need Foreign Investment Review Board approval.

Despite the rival bid from BG, Arrow shares jumped 12% to A$2.48 compared with a 1.1% rise in the broader Australian market as investors speculated that it too could become a takeover target. Pure shares are in a trading halt and last traded at A$5.28.

Write to Ross Kelly at [email protected]

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