Mineral Resources trumps Chinese bid for Australian gas producer AWE

MELBOURNE (Reuters) - Australia's Mineral Resources MIN.AX has offered A$484 million ($364 million) for domestic gas producer AWE Ltd AWE.AX, topping a sweetened bid from state-owned China Energy Reserve and Chemicals Group (CERCG).

The two suitors are targeting AWE’s stake in a gas project in Western Australia, Waitsia, which the company has called the country’s biggest conventional gas find onshore in four decades.

Mineral Resources, a provider of mining infrastructure, made an all-scrip offer worth A$0.80 a share based on its closing price last Friday, a 47 percent premium to AWE’s last trade before it revealed on Nov. 30 that it had received an offer from CERCG.

CERCG last Friday raised its all-cash offer slightly to A$0.73 a share, going straight to shareholders after AWE rebuffed a friendly approach.

AWE told shareholders on Monday to take no action while it weighed the two offers. Its shares jumped 15 percent to trade above both offers at A$0.84, their highest level since August 2016.

Both offers are well below a valuation of A$0.91 from analysts at Royal Bank of Canada, which ran a recent share sale for AWE.

Shares in Mineral Resources, which has offered one of its shares for every 22.33 AWE shares, fell 4.8 percent after the bid was announced.

Mineral Resources said the acquisition would help it secure energy supplies for its own operations.

CERCG said on Monday it is mainly looking to supply gas to remote communities and mine sites in Australia using its technology to liquefy gas, transport it in containers and regasify it in areas not connected to pipelines.

However it is also considering shipping LNG in containers to Australia’s east coast, where gas prices have soared due to the start-up of three gas export plants and rising demand for gas-fired power.

“We believe we have the technology and business know-how to provide a cost-effective gas supply to customers pretty much anywhere in Australia,” CERCG Australia business manager Kevin Gao said in a statement.

AWE rejected a A$750 million scrip-based offer from Senex Energy in 2013 before oil prices collapsed and a A$421 million approach from U.S. private equity firm Lone Star last year.

($1 = 1.3319 Australian dollars)

Reporting by Sonali Paul; Additional reporting by Rushil Dutta in Bengaluru; Editing by Stephen Coates