Origin rejects BG's revised $13 bln bid

By Fayen Wong

PERTH (Reuters) - Australia's Origin Energy (ORG.AX: Quote, Profile, Research, Stock Buzz) has rejected an improved $13 billion bid from UK gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz), saying its coal seam gas reserves alone are worth over $15 billion after doubling its resource estimate.

Origin, Australia's largest coal-seam gas producer, said it would now focus on how to get the best value from its reserves, possibly through partnerships to supply a liquefied natural gas (LNG) plant or even through a break-up of the company, which also has power generation and retail businesses.

"We're now back in the game and we will be aggressively pursuing those alternatives as quickly as we can," Chairman Kevin McCann told reporters on Friday.

Origin said it was open to talking to BG about supplying its planned LNG plant in Gladstone, Queensland, or any other offer.

"BG is welcome to come back in any way they want," McCann said. BG said it was surprised by Origin's rejection and was considering its options.

Origin said BG increased its offer to A$15.50 per share in cash, valuing it at about A$13.6 billion and up from an initial offer last month of A$14.70 a share. The new offer is 48 percent above Origin's closing share price on April 29, the day before BG announced its initial proposal.

Origin shares closed up 6.85 percent at A$15.6, after hitting a record A$16.15, signaling investors are hopeful of a higher bid. Its shares have surged around 80 percent since the start of the year.

Shares in BG, which was spun out of former UK gas monopoly British Gas in 1997, fell as much as 5.2 percent to 1,227 pence in early London trade on disappointment it may have to raise its bid further to clinch a deal.