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Shell to accept improved BG offer for Pure Energy

Reuters UK

Tue Mar 3, 2009 8:55am GMT

PERTH (Reuters) – Royal Dutch Shell (RDSa.L) said it plans to accept BG Group’s (BG.L) improved offer for its stake in Australian coal seam gas firm Pure Energy (PES.AX) in the absence of a higher bid, helping the British firm move closer to a takeover.

Shell owns 11.2 percent of Pure, which has also received a takeover bid from Australian coal seam gas firm Arrow Energy (AOE.AX), which holds 20.2 percent of Pure.

“BG is certainly making progress and seems to have a lead on the deal, but it still hasn’t got the winning card,” said an analyst, who asked not to be identified due to company policy.

“Until either BG or Arrow gets 50 percent of Pure and gains control of the company, the game’s not over.”

BG had 29.5 percent of Pure as of Monday, and Shell’s stake would raise its interest to 40.7 percent.

Both BG and Arrow want Pure’s coal seam gas assets in Australia’s northeastern state of Queensland to boost their gas reserves and help underpin their proposed liquefied natural gas (LNG) projects.

BG last week raised its all-cash offer for Pure by 25 cents to A$8.25 a share and said the bid was conditional on reaching 90 percent shareholder acceptance.

Arrow, which has offered A$3 in cash and 1.57 Arrow shares, implying a bid of A$6.57 a share, could not be immediately reached for comment. Arrow said last week it was considering its options.

Arrow is Shell’s local partner for coal seam gas ventures. The Anglo-Dutch energy major has said it was considering building a coal seam gas-fuelled LNG plant in Queensland.

Shell’s sale of its Pure stake to BG should end speculation Shell would back Arrow with its financial muscle to help Arrow beat BG in the takeover tussle.

Another analyst said he was doubtful that Arrow, without BG’s deep pockets, would be able to come back with a higher bid, but added Arrow could possibly sell its stake in exchange for some of Pure’s gas assets.

Shares in Pure closed 0.4 percent higher at A$8.17 on Tuesday, while Arrow fell 3.5 percent to settle at A$2.43.

(Reporting by Fayen Wong)


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