BG Group to buy Queensland Gas for $3.4 billion

SYDNEY, Australia – British natural gas producer BG Group PLC said Tuesday it has agreed to buy Australia's Queensland Gas Co. Ltd. in a deal worth 5.6 billion Australian dollars ($3.4 billion), to expand its reach into the Asia-Pacific region.

The deal comes less than two months after BG, Britain's third-largest oil and gas company, was stymied in a multibillion-dollar bid for another Australian target, Origin Energy Ltd., which struck a gas joint venture deal with ConocoPhillip.

BG and QGC said in a joint statement that the British company was offering AU$5.75 cash for each QGC share it doesn't already own — 80 percent more than the closing share price on the previous day's trading and valuing the Australian coal seam gas producer at AU$5.6 billion ($3.4 billion).

BG already owns almost 10 percent of QGC and the two companies are partners in a proposed liquefied natural gas development project in northeastern Queensland state.

Queensland Gas Co.'s directors unanimously recommended the deal to shareholders, and QGC's largest shareholder — AGL Energy Ltd., which holds almost 25 percent — announced it has accepted the BG offer. BG's stake in QGC increases to 46.2 percent after acceptances and declared intentions.

QGC shares surged almost 80 percent to AU$5.75, suggesting investors believe the deal will go through.

The offer is open until Dec. 15.

BG Group Chief Financial Officer Ashley Almanza said QGC purchase would enhance its global gas strategy and provide the group with both Asia-Pacific resources and Pacific-basin LNG supply.

In September, BG abandoned its hostile takeover bid for Origin Energy Ltd., Australia's second-largest power retailer, after Origin announced a coal seam liquefied natural gas joint venture with U.S. energy giant ConocoPhillips valued at AU$9.6 billion. BG said the price for that investment indicated a takeover of Origin would be too expensive.

"Establishing a single integrated organization within a one-company ownership structure allows BG Group to optimize the development of the LNG scheme as well as expand QGC's resource base for the supply of both domestic and export markets," BG chief executive Frank Chapman said in a statement.