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SYDNEY : Australia's Origin Energy said Friday it planned to recommended that shareholders reject a 13.8-billion-dollar (13.1 billion US) hostile takeover bid by Britain's BG Group.
BG announced last month it would go directly to Origin's shareholders with the 15.50 dollars a share all-cash offer after the board of Australia's second largest power retailer snubbed a friendly bid at the same price in May.
Origin said then it could not accept the offer because its coal seam gas (CSG) reserves in Australia's Queensland state were more extensive and more valuable than previously thought.
"In rejecting BG's original proposal at the same price on 30 May 2008, the Origin Board gave careful consideration at the time to all relevant information including information that evidenced an increasing appreciation of CSG valuation," Origin's chairman Kevin McCann said in a statement Friday.
"It is the Board's belief that accelerating the monetisation of Origin's CSG reserves through a formal process of inviting proposals from suitably qualified and experienced parties will enable Origin to test the value of its CSG assets through a competitive process."
The statement said full details and reasoning for the Board's recommendation would be released but in the meantime shareholders "should take no action and ignore all correspondence and contact from the BG Group."
BG chief executive Frank Chapman had said the offer was a 48-per cent premium on Origin's share price immediately before the bid was launched and represented full value for its takeover target.
Chapman said questions over Origin's CSG reserves meant an all-cash offer would be attractive to shareholders.
- AFP/ms
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