BG Group has made an unsolicited offer to buy Origin Energy for A$12.9 billion ($12 billion) as it seeks to boost sales of the fuel into Asia.
The cash bid values shares of Origin, Australia's biggest coal-seam gas producer and second-largest energy retailer, at A$14.70 each, 40 per cent more than yesterday's close.
Origin has yet to consider BG's offer and advised shareholders to take no action, the Sydney-based company said in a statement today.
BG, which is planning a liquefied natural gas project in Australia, said in March it was seeking more opportunities to supply LNG to Asia, the biggest market, after linking with coal-seam gas producer Queensland Gas, or QGC, for an A$8 billion LNG export project in Australia's northeast.
Prices for LNG paid by utilities in Japan, the world's biggest importer of the fuel used for power generation, have reached as high as $20 per million British thermal units, almost double the US benchmark, consultant Facts Inc. said.
"BG came in and took a share of QGC on the basis of LNG export opportunities based on coal seam gas,'' said Andrew McManus, a Sydney-based gas and power consultant at Wood Mackenzie Consultants. "Now they're trying to build that position."
Origin shares rose as much as 40 per cent to A$14.60 in Sydney trading, a record gain and the all-time high for the stock.
Queensland Gas gained as much as 16 per cent, while Adelaide-based Santos, which is proposing a rival LNG project in Queensland also based on coal seam gas, dropped as much as 4.3 per cent.
If successful, the acquisition would be the second-largest foreign takeover of an Australian company after the $14.2 billion purchase last year of Rinker Group by Cemex AB, North America's largest cement producer.