KEY POINTS:
Contact Energy shareholders face a long wait before the company's fate is known following a Takeovers Panel ruling on British BG Group's bid for Origin Energy.
BG has launched a A$12.9 billion ($15.81 billion) takeover proposal for Origin, Australia's second biggest electricity and gas retailer and 51.36-per cent owner of Contact.
New Zealand's Takeovers Panel has granted BG an exemption, meaning it would not have to launch an immediate takeover attempt on Contact. But it would have to make a move within one month of a successful Origin takeover.
"It is a condition of that exemption that, if the proposed acquisition of Origin is successful, BG Group make a follow-on offer," the British company said.
Forsyth Barr analyst Andrew Harvey-Green said it was significant the BG statement placed a zero premium on Contact.
"They're just looking at paying market price in effect - if that continues that's all the shareholders can expect and at that price you wouldn't expect anyone to be taking up that offer," he said.
He said it seemed unlikely BG would go for 100 per cent of Contact.
"Selling is the more likely option but what they might do is sit and wait until they decide what they want to do with Origin's generation assets. They may look at Contact at the same time."
BG's offer, made a fortnight ago, is designed to boost BG's exposure to coal seam gas in Queensland, where it plans to build an LNG plant.
Harvey-Green said the waiver effectively bought BG time while Origin's resistant stance to the offer price meant the process could drag on.
"This is the potential there if they play that card particularly strongly that the price might become too high. It's not a slam dunk that's going to go ahead as it initially appeared."
This could change quickly if the offer was increased though, he said.
Other sources believe BG is likely to try and line up a sale to a third party of the 51 per cent Origin stake before the deal is done. BG could also look at keeping up to 20 per cent and selling the remaining 31 per cent in parcels to institutional shareholders, in order to avoid a full takeover offer.
An investor acquiring more than 20 per cent of a company must make a full offer for the business.
Contact said yesterday aside from information from the Takeovers Panel, it had received no other information from BG or Origin.
A bid for Contact would have to be at the value per share attributed by BG and verified by a Takeovers Panel-approved independent expert.
The conditions would also include the approval of the Overseas Investment Office, which could be a tough hurdle given the Government's stance on foreign investment in infrastructure assets.
Grant Williamson, a partner at Hamilton, Hindin, Greene, said Contact shareholders remained in the dark.
"The main thing is the uncertainty. The shareholders don't know whether BG will try to offload Contact. You would think with the large premium BG have paid for Origin there would be some further value in Contact. I think the whole scenario does underpin Contact's share price."
Contact shares closed up 7c at $9.09 yesterday.
