Takeover

Arrow Energy (AOE) shares jumped $1.63 (47%), closing yesterday's trade at $5.11. The share price jump can be attributed to the joint bid by Royal Dutch Shell and PetroChina for AOE in a deal worth at least $3.3 billion as the companies seek to expand their presence in the coal seam gas sector. The conditional bid would give shareholders $4.45 cash per share plus a share in a newentity comprised of Arrow's international business.

The British Gas giant, BG Group, is back with its offer bid price of $15.50 a share for a hostile takeover of Origin Energy (ORG). Its offer had been earlier rejected its offer stating that the sale price has to be "a lot more" that $15.50 a share price. This time the BG has offered the price directly to its shareholders. It had earlier offered a price of $14.70 a-share price but had revised it by 48 percent to $15.50.

Chinese steelmaking giant Sinosteel Corporation is finally edging nearer to takeover management of control of Midwest Corporation (MIS). Sinosteel has made significant changes in a notice to its shareholders stating that it now has voting stake of 33.82 percent in Midwest Corporation which means it owns nearly one-third voting power in Midwest. It raised its stake in Midwest to 28.37 percent which is about 20 percent higher than its previous bid.

Have you noticed the number of company takeovers lately? Macquarie Research Equities (MRE) have noticed the trend and have made the following observations. They note that the current takeover and rumour frenzy has had its equivalent in the past, namely the year of 1986. They note that there are similar drivers to the takeover frenzy as there was in 1986. There are two drivers to the phenomenon.

Potential takeover targets in the Australian Equities Market