OSLO (Reuters) - BW LPG (BWLPG.OL), the world’s biggest liquid petroleum gas (LPG) shipper, has bought 12.1 percent of smaller rival Aurora LPG AURLPG.OL, potentially disrupting a hostile bid from Avance Gas Holding (AVANCE.OL).
Owners of Very Large Gas Carriers (VLGCs) are reporting bumper profits as the global demand for liquefied petroleum gas, commonly used as a fuel for cooking, heating and in some vehicles, continues to rise.
Avance Gas launched a $200 million takeover bid last month for Aurora in an offer set to expire on Dec. 16 and which Aurora’s board has asked its owners to reject.
Aurora has three ships in operation and six more due for delivery in 2016, making it a valuable prize for competitors seeking expansion and economies of scale.
Shares of all three companies listed in Oslo rose on Wednesday, with Aurora up 3.8 percent, BW up 4.3 percent and Avance rising 0.4 percent at 1049 GMT.
Aurora climbed to 68.50 crowns per share, above the 66.6 crown value implied by Avance’s all-share offer at the moment.
BW LPG Chief Executive Martin Ackermann declined to say whether his company would raise its stake further, or launch a bid for all of Aurora’s shares.
“This will be a cash generating investment,” Ackermann told Reuters. “I can’t comment on future strategy.”
BW says there are 200 VLGCs in the world and the global fleet is likely to grow by about 23 percent next year. BW owns 35 VLGCs and also has six vessels on order for 2016 delivery.
While fleet operators are doing well now, some have said the rapid growth could eventually lead to lower rates.
In response to BW’s move, Avance Gas said it plans to lower its original requirement that it must get a 90 percent stake in Aurora before going through with its bid.
“It’s just a matter of time before we do so, and of how far down we go. In that sense it doesn’t matter whether or not BW holds more than 10 percent,” Avance Gas Chief Executive Christian Andersen told Reuters.
“In terms of the price, it’s more a case of take it or leave it,” Andersen said. “We definitely won’t participate in a bidding war.”
“I believe consolidation in the industry will be important as the business cycle progresses,” he said.
($1 = 8.7317 Norwegian crowns)
Reporting by Ole Petter Skonnord and Henrik Stolen; writing by Terje Solsvik; editing by David Clarke