BG Group plc, Britain's No. 3 oil and gas producer, agreed to pay A$5.2 billion ($3.1 billion) for the 91.3% of Queensland Gas Co. that it doesn't already own to expand its operations in Australia's east coast coal seam gas fields.
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BG and QGC said Tuesday they had agreed to an A$5.75 per share offer. The bid represents an 80% premium to the Australian miner's closing price of Thursday, before its stock was suspended, but is lower than QGC's record closing price of A$6.22, which was recorded in May.
QGC chief executive Richard Cottee said the decision to accept the bid was in part driven by a sharp rise in the cost of financing in recent months following the collapse of the world's credit markets and ensuing stock market decline.
"Our WACC [weighted average cost of capital] got whacked in the last eight weeks," he told reporters on Tuesday. "This is delivering, in a net present value sense, the best return for our shareholders given certainty and risk." - Paul Whitfield
