AWE settles for $403m offer from mining service provider Mineral Resources

Energy acquisition news : AWE, an Australian oil and gas company has agreed to a sweetened takeover proposal of AUD 526 million ($403 million) from mining services provider Mineral Resources Limited (MRL).

AWE, in this connection, has entered into a binding scheme implementation deed with Mineral Resources to endorse the merger proposal.

Founded in 1997, the ASX-listed AWE focuses on upstream oil and gas opportunities. It boasts of production, development and exploration assets located across Australia, New Zealand and Indonesia with primary focus on the Perth Basin.

Earlier in the month, the mining services provider had offered to pay AUD 484 million ($364 million) to acquire AWE. Prior to that, the Sydney-based oil and gas company had been offered AUD 463 million ($347.94 million) for a takeover by China Energy Reserve and Chemicals Group (CERCG). However, the deal didn’t get through with CERCG pulling out from it.

AWE’s activities in onshore Perth Basin. Photo courtesy of AWE Limited.

Mineral Resources during the original offer stated that AWE acquisition aligns with its renewable energy strategy of bringing in gas assets in portfolio for the vertical integration of its energy supply chain. Included in this strategy of the mining services provider are LNG-fired power projects to deliver electricity supply to a variety of end users.

Chris Ellison, the Managing Director of Mineral Resources said: “The acquisition of AWE, including its 50% interest in the Waitsia Gas Project, is logical and on-strategy for MRL. MRL has a strong desire to develop this tier one gas asset to form a key pillar of the MRL business over the next 20 to 30 years.

‘We expect to also be able to provide gas to a wider range of end power users, displacing diesel and providing a range of benefits to the Western Australia economy.”

Mineral Resources has now proposed to buy each of the AWE shares at AUD 0.831 with the consideration to be received by the shareholders through a combination of cash and share or maximum cash consideration or maximum share consideration.

Commenting on the Mineral Resources acquisition of AWE, Kenneth Williams – the Chairman of AWE said: “The acquisition price represents a highly attractive opportunity for AWE shareholders to realise a material premium for their AWE shares.

“Shareholders who receive Mineral Resources shares can choose to remain invested in the larger and more liquid Mineral Resources or they can choose to sell their new Mineral Resources shares for cash”.

As per the latest energy acquisition news, the proposal from Mineral Resources will have to get clearance from the shareholders of AWE as well as need a Court approval and meet other conditions.