Britain's BG bids $12 bln for Australia's Origin

By Fayen Wong and Tom Bergin

PERTH/LONDON (Reuters) - UK gas producer BG Group Plc has made a $12 billion bid approach to Origin Energy Ltd, seeking to bolster its position in the fast-growing Asia-Pacific gas market by securing the Australian utility's gas reserves.

The companies said BG (BG.L: Quote, Profile, Research, Stock Buzz), valued at around $85 billion, had approached Origin (ORG.AX: Quote, Profile, Research, Stock Buzz) with a proposal of A$14.70 per share in cash, a 40 percent premium to Origin's close of A$10.47 on Tuesday.

Analysts said the purchase of Australia's second-largest power retailer would help fill a hole in BG's liquefied natural gas (LNG) business.

"Strategically, such a purchase looks sound, based on BG's aspirations to have regional supply of LNG to Asia-Pacific markets," said David Thomas, oil analyst at Citigroup.

BG also reported a forecast-beating 78 percent rise in first-quarter profit to 767 million pounds ($1.52 billion) on Wednesday, helped by a tripling in profit trading LNG in Asia.

However, the company's shares traded down 3.75 percent at 1,259 pence at 7:25 a.m. EDT, on fears it was offering too much for Origin.

"It's a pretty high price and premium," said Sydney-based Jason Mabee, a utilities analyst at ABN AMRO.

But analysts at Merrill Lynch said in a research note that based on Origin's price earnings ratio, the proposed price would be cashflow neutral, while Citigroup estimated minimal earnings dilution in the near term.