CERCG Makes Second Bid for Australian AWE
China Energy Reserve and Chemical Group (CERCG) has made another takeover bid for Australian upstream oil and gas focused AWE, the takeover target announced on the Australian Stock Exchange December 8.
The all cash takeover offer of A$0.73 (US$0.55) per share follows a bid made last week, which was subsequently withdrawn, of A$71/share.
Following the receival of the first bid on November 30, AWE said it was “not sufficiently attractive to provide access to due diligence”.
RBC Capital Markets analyst Ben Wilson said despite the small lift on the first offer, RBC still thinks the bid pricing is too low. RBC has a A$0.90/share price target for AWE.
CERCG said it has been in discussions with AWE for the past two months about acquiring the company and has encountered “unproductive engagement” with the company’s board.
“CERCG Australia has now decided to make a direct offer to AWE Shareholders,” it said.
CERCG said AWE has seen significant erosion of shareholder value and believes that the company’s Waitsia Gas Field, and its increasing 2P Reserves and future development, has the potential to return value to its shareholders.
“It is for this reason that CERCG Australia is prepared to pay such a substantial premium for AWE,” it said.
“AWE Shareholders now have a clear choice to make: they need to weigh up the future benefits and risks of remaining a shareholder of a company with a track record of not delivering acceptable shareholder returns against the alternative they now have of accepting a compelling cash offer to acquire all of their shares at a significant premium,” it said.
The Waitsia gas field in the northern Perth Basin in Western Australia is regarded as the largest onshore conventional gas discovery in Australia for the last 40 years and has the capability to supply the domestic market with 100 TJ/day for at least 20 years from conventional reservoirs, AWE says.
CERCG’s offer is subject to conditions such as a minimum acceptance in 50% of AWE shares, FIRB approval and no new gas sales agreements in relation to Waitsia below A$5.50/GJ.