January 31, 2018 / 2:55 AM / a year ago

Australia's AWE serves Mineral Resources notice to match Mitsui offer

(Reuters) - AWE Ltd has given suitor Mineral Resources three days to match a A$594 million ($480 million) takeover offer from Mitsui & Co, or it will back the Japanese bid as a superior offer.

The logo of Japanese trading company Mitsui & Co. is seen in Tokyo, Japan, January 10, 2018. REUTERS/Toru Hanai

The Australian gas producer said in a statement it notified Mineral Resources late Tuesday, giving it a deadline of Friday, Feb. 2 to match the Mitsui proposal, which was 14.5 percent above an offer from Mineral Resources.

AWE said it would agree to Mitsui’s all cash offer of A$0.95 a share if Mineral Resources did not match it.

Investors, however, are eyeing a higher bid emerging, with AWE’s shares currently trading at A$0.97 a share.

Mineral Resources was not immediately available for comment on Wednesday, but a spokesman said in an emailed statement on Monday that the company was looking at Mitsui’s proposal and considering its position.

Mitsui’s offer on Monday marked the first full takeover bid by the Japanese trading giant for an Australian company and would make it the operator of a gas field for the first time, bolstering its credentials to bid on other gas assets.

State-owned China Energy Reserve and Chemicals Group (CERCG) had also bid for AWE last November, although its offer was later topped by Mineral Resources.

All three suitors want AWE for its 50 percent stake in the Waitsia gas field, considered the biggest onshore conventional gas find in Australia in the last 40 years, with enough gas to supply about a tenth of the Western Australian market.

The other owner of Waitsia, Beach Energy, said it is closely watching the AWE takeover tussle. It just obtained its 50 percent stake with its acquisition of Origin Energy’s Lattice business, completed on Wednesday.

“The key for us is that we have long thought that Waitsia was a very high quality asset,” Beach Chief Executive Matt Kay told Reuters.

Kay declined to comment on whether Beach would be comfortable with Mineral Resources, a miner, becoming operator of Waitsia, but said Beach would be happy to volunteer its skills running gas projects to any partner.

He did not rule out selling Beach’s Waitsia stake to one of AWE’s underbidders, but declined to comment on whether Beach had held any talks with any of the suitors.

“We’re not actively selling any assets. But if someone wants to put a number on the table, we’re willing to listen and hear.”

($1 = 1.2370 Australian dollars)

Reporting by Sonali Paul; additional reporting by Aditya Soni and Rushil Dutta in Bengaluru; editing by Richard Pullin

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