QGC Agrees $5.6 B Deal With BG Group

123jump.com Staff
28 Oct, 2008
New York City

Queensland Gas agreed to be acquired by UK based BG Group in a deal that values the company at $5.6 billion. The all cash offer will increase BG stake to 100%. Australian dollar regained some of the lost ground against yen and the U.S. dollar. Stocks edged lower.

[R]3:00AM New York, 7:00PM Sydney – Queensland Gas Company soars 80% on a deal with UK based BG Group. Australia''s business conditions fall in September.[/R]

Australian stock indices fell marginally as defensive stocks pared early morning losses. A stock rally in Japan also helped the market recover in the afternoon trading session. The yen fell from a record high against euro and dropped from a 13-year high against the U.S. dollar.

Market Sentiment

In Sydney trading ASX 200 fell 0.4% or 14.6 to 3,794.60.

Of the ASX 200 index stocks 51 rose, 139 declined, and 10 were unchanged. Queensland Gas Co. led advancers in the index shares with a rise of 80% after BG Group agreed to buy purchase the company for $5.2 billion.

Australian Business Conditions Deteriorate in September

National Australia Bank reported today that the business conditions survey declined by 11 points to –4 points in the quarter to September, falling the most since 2001.

Indexes for trading conditions, profits and employment dropped 1 point, 10 points and 3 points correspondingly.

The 900 small-to-medium sized businesses surveyed in late August and early September lowered their expectations for the next quarter by 7 points, while outlook for the coming 12 months was lowered by 4 points.

NAB''s survey showed that capacity utilization fell below 82% in the three months to September.

In addition, companies have scaled down capital investments, hiring and forward orders.

However conditions in the mining and business services were strong in the review period.

NAB''s chief economist Alan Oster said, ""Business conditions deteriorated further to turn poor in the September quarter - especially relative to earlier expectations - with little improvement expected in the December quarter. Current conditions are now consistent with current lower levels of confidence. Firms expect a sustained period of weaker business conditions - both in the near term and next year.""

Australia''s GDP to Rise 2.5% in 2008

Separately, NAB reported that Australia''s gross domestic growth is expected to rise 2.5% this year and 1.25% next year.

The lender also slashed its global economic growth estimate to 3.5% for 2008 and 2.5% for 2009, with Europe, Japan Britain and the US expected to slip into recession.

China is forecasted to experience moderate growth.

Australian Dollar Rises

The Australian dollar rebounded to 60.71 cents against the dollar from 61.19 cents yesterday after the Reserve Bank of Australia intervened in the market and Asian markets closed higher.

Gainers & Losers

Queensland Gas Co. led advancers in the ASX 200 index shares with a rise of 79.69% followed by increases in Panaust Ltd. of 20%, in Nexus Energy of 10.71%, on Oil Search Ltd. of 7.94%, and AGL Energy of 7.31%.

QGC and other energy stocks rose after U.K. based BG Group agreed to buy the company for $5.75 a share, 80% premium over the October 23 closing price.

Emeco Holdings led decliners in the ASX 200 index shares with a fall of 18.25% followed by losses inn Macquarie Media of 18%, in Babcock & Brown of 16.7%, in ING Office Fund of 16.2%, and Henderson-CDI of 14.2%.

Property stocks declined. Australand Property shed 9.84% and Abacus Property dropping 11.54%.

BG Agrees to Buy QGC for $5.2 billion

Boards of BG Group and Queensland Gas Co announced that they have agreed a deal through which BG will purchase all the issued shares of QGC for $5.75 per share, a 80% premium to October 23 closing price.

The all-cash offer values the company at $5.6 billion and BG proposal to increase its holdings in QGC to 100% will cost $5.2 billion.

The Foreign Investment Review Board has approved the deal.

BG has pre-bid agreements to acquire the entire shareholdings of the gas company''s two biggest institutional investors ANZ Infrastructure Services and Sentient Group, including prior arrangements to acquire shares held by Chairman Robert Bryan and Managing Director Richard Cottee.