BG Group said yesterday that it had not ruled out raising its A$13.8bn (£6.7bn) offer for Origin Energy as the Australian natural resources group formally rejected its hostile bid.
Grant King, Origin's chief executive, said that BG's offer for the company undervalued its huge coal seam gas reserves. "We are living in a time when energy prices globally are increasing, which adds to the value of the business," he said.
BG first approached Origin in May, and is keen to become the first company in the world to convert coal seam gas into liquefied natural gas. Origin's board initially accepted the $15.50-per-share offer, but changed its mind following a similar deal between Santos and Petronas, which was completed at higher valuations.
Frank Chapman, BG's chief executive, is not ruling out increasing his bid for Origin, though he attacked the company's A$16bn valuation of itself. Mr Chapman pointed out that Origin has no experience in the liquefied gas market, and that no company has yet brought coal seam gas to market.
"It remains the case that Origin must spend a significant amount of time and money to prove up its coal seam gas potential," he added.
Origin has also said that its rejection of BG's offer reflects concerns about the regulatory hurdles the deal would have to clear, and that it is now keen to pursue partnership deals to exploit its offer.Reuse content