Late last month BG (British Gas) made a second hostile $NZ17.5 billion takeover bid for Origin Energy at $A15.50 per share, pitched directly to its shareholders, after its first takeover offer a month earlier, for the same price, was made to Origin's board, but rejected.
As with the first rejection, Origin chief executive Grant King yesterday reiterated that the company's estimated coal seam gas reserves had "a prime acreage position in Queensland in terms of both quality and quantity of [coal seam gas] resources" which needed to be quantified.
"It is the board's belief that accelerating the monetisation of Origin's coal seam gas reserves through a formal process of inviting proposals from suitably qualified and experienced parties will enable Origin to test the value of its coal seam gas assets through a competitive process," Mr King said in a statement.
Origin Energy owns a 51.4% stake in major New Zealand electricity generator Contact Energy and the takeover bids have raised speculation on its future ownership, or it possibly becoming a takeover target itself.
Contact's generation assets include the Clyde and Roxburgh hydro power stations.
In a statement to the market yesterday, Contact said it had received no other non-public information in relation to BG Group's offer or Origin's response.
ABN Amro Craigs broker Peter McIntyre said it was "no surprise" Origin had rejected the second takeover offer as it would be "playing for time".
"Origin will be acting in the interest of shareholders. They're looking for a true assessment of their coal seam gas reserves," Mr McIntyre said.
Unlike New Zealand, there was an abundance of gas in Australia, plus gas infrastructure and opportunity to export gas, he said.
"British Gas see's Australian gas prices rising, both domestically and in the export markets," Mr McIntyre said.
Mr King said Origin would shortly release a report to its shareholders with the details and reasoning behind the board's recommendation to reject BG's conditional takeover bid and encouraging them to take no action on the offer in the meantime.
