UK's BG makes hostile $13.1 billion Origin bid

By Fayen Wong

PERTH (Reuters) - British gas producer BG Group launched a hostile $13.1 billion bid for Australia's Origin Energy, as it seeks to boost its position in Asia-Pacific's fast-growing gas market.

BG is taking its A$13.8 billion all-cash bid, valuing Origin at A$15.50 a share, direct to Origin shareholders after Origin's board rejected it last month.

Origin claimed then that its coal seam gas reserves alone were worth over $15 billion after it doubled its resource estimate to 10,000 petajoules.

Shares in Origin, which have surged over 85 percent this year, rose 6.2 percent to a record A$16.48 before closing up 5.8 percent at A$16.42, indicating investors expect a higher offer.

If successful, the deal would be the second-largest foreign takeover of an Australian company after Cemex, North America's largest cement producer, bought Rinker Group Ltd last year for $14.2 billion.

BG said the offer, which represents a 48 percent premium to Origin's close on April 29 before the bid was announced, reflects the value of Origin's integrated energy business and the long-term prospects of its coal seam gas reserves.

"It's no surprise BG would launch a hostile bid. It's a very generous offer and I think some shareholders may be swayed and may decide to just take the money and run," said Gavin Wendt, head of research at Fat Prophets Funds Management.

"But there's also a chance BG's hostile move may drag out other parties interested in Origin's coal seam gas assets."