Chinese Takeover Bid for Australian AWE Withdrawn

China Energy Reserve and Chemical Group (CERCG) has withdrawn the takeover bid it made last week for Australian upstream oil and gas focused AWE, AWE said November 5. The conditional, non-binding indicative proposal was to acquire 100% of the shares in AWE for A$0.71 ($0.54) per share.

Following the receipt of the bid on November 30, AWE said it was “not sufficiently attractive to provide access to due diligence”. RBC Capital Markets analyst Ben Wilson said November 5 that he was not surprised. "The manner in which the indicative bid was rebuffed, specifically making the bid letter public... possibly impacted the bidder’s appetite to push ahead,” he said. “We had noted that a raised bid was possible given the strong backing from the bidding party and our risked DCF valuation of A$0.91/shr supported by appraisal results in the Waitsia field,” he said.

He said that there likely needs to be some clear air before a follow-up bid is made.

AWE’s priorities centre on the development of Stage 2 of the Waitsia gas project in Western Australia and securing new gas sales contracts for Casino and BassGas on the east coast at substantially higher prices, AWE says on its website.