agl tipped to bid for sydney gas

AGL tipped to bid for Sydney Gas

December 23, 2008 - 2:12PM

AGL Energy, Australia's top energy retailer, triggered speculation it was making a bid for Sydney Gas after both stocks were halted from trade pending a major transaction.

Sydney Gas, a junior coal seam gas producer worth about $110 million, said in a short statement it would make an announcement about a takeover bid, but did not name the bidder.

Separately, AGL telegraphed a "material transaction", but gave no details.

Shares in mining services firm AJ Lucas Group, which owns a fifth of Sydney Gas, were also suspended.

"Looking at the companies that have requested a trading halt, it would suggest AGL is going to make a takeover bid for Sydney Gas," said Adam Dixon, a fund manager at Ausbil Dexia.

A source with knowledge of the deal told Reuters that AGL, which already has a joint venture agreement with Sydney Gas to develop a coal-seam gas field in New South Wales state, was launching a cash takeover bid for Sydney Gas.

AGL said it expected to make an announcement before the start of trading on Wednesday.

AGL, which has boosted its balance sheet with a string of divestments worth over $3 billion over the past year, has said it is seeking acquisitions to increase its gas reserves to reduce purchases on the wholesale gas market after a sharp rise in prices over the past two years.

Last week, AGL moved to shore up its coal-seam gas reserves in New South Wales by paying AJ Lucas Group and Molopo Australia $370 million for exploration ground in the Gloucester Basin.

Reuters

http://business.smh.com.au/business/markets/agl-tipped-to-bid-for-sydney-gas-20081223-742u.html