AWE Surges After Rejecting Takeover Bid From Lone Star Funds

  • Offer of A$0.80/share is 30% premium to closing price Tuesday
  • Australian explorer shares gain 16 percent in Wednesday trade

AWE Ltd., an Australian oil and gas explorer, rejected a A$421 million ($310 million) takeover offer from private equity firm Lone Star Funds, saying the bid doesn’t reflect the value of the company.

Lone Star Japan Acquisitions Ltd. offered 80 cents a share in cash in a preliminary proposal, Sydney-based AWE said Wednesday in a statement. That’s 30 percent more than AWE’s closing price on Tuesday of 61.5 cents a share. AWE shares rose 16 percent to close at 71.5 cents in Sydney on Wednesday.

“The board concluded that it is opportunistic and does not reflect the fair underlying asset value of the company,” AWE said, adding that the proposal was non-binding and subject to a number of conditions.

The initial bid followed a 23 percent gain this year in AWE’s shares as of Tuesday. The Australian explorer is focusing on the development of its Waitsia natural gas project in Western Australia and is seeking to take advantage of rising gas prices on the nation’s east coast, David Biggs, the company’s new managing director, said earlier this month.

AWE in 2013 rejected a A$752 million initial takeover proposal from Senex Energy Ltd., saying it undervalued its shares.

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