MELBOURNE •Mitsui & Co won a three-way bidding war to take over Australia's AWE, after rival Mineral Resources failed to match the Japanese trading giant's A$594 million (S$621 million) offer.
Assuming the deal goes ahead, it would mark Mitsui's first takeover of an Australian firm, and give it a 50 per cent stake in the country's biggest onshore conventional gas find in 40 years.
"It should be a relatively low-risk investment for Mitsui with the possibility of very decent returns, given the upswing in domestic gas prices in Australia," said Mr Tom O'Sullivan, managing director of energy consultancy Mathyos Japan in Tokyo.
AWE yesterday withdrew its support for Mineral Resources' bid and recommended shareholders accept Mitsui's all-cash offer of 95 Australian cents a share after Mineral Resources did not match Mitsui's offer by a Feb 2 deadline. AWE also recommended shareholders reject a bid of 73 Australian cents a share by China Energy Reserve and Chemicals Group (CERCG).
"The Mitsui proposal, pitched at a significant premium to the competing offers, represented a superior value proposition," AWE chairman Ken Williams said in a statement.
Mitsui's offer - 74 per cent above AWE's share price last November before CERCG's bid was announced - is 30 per cent above CERCG's bid and 14 per cent better than Mineral Resources' offer.
"The control premium is quite substantial," said Deutsche Bank analyst John Hirjee.
Investors yesterday bet no other bidders would emerge, sending AWE's shares down 3.6 per cent to 95 Australian cents, in line with the offer price.
With the AWE takeover, Mitsui would become operator of a gas field for the first time, running the Waitsia gas project, a role Mitsui said would bolster its credentials to bid on other gas assets in Australia.
"Winning this attractive asset is one of our major purposes for this deal," Mitsui's investor relations head Yuji Mano told analysts on a quarterly earnings call yesterday.
The Japanese firm already has stakes in gas fields in eastern Australia, where it has worked closely with AWE, and also owns stakes in liquefied natural gas projects in Western Australia, as well as coal and iron ore mines.
Mitsui is expected to lodge its bidder's statement on Friday, AWE said.
REUTERS
