AGL (agl.ASX:Quote,News) said it will offer to acquire all shares in Sydney Gas at 42.5 cents per share in a formal off-market takeover bid.
The board of Sydney Gas has unanimously recommended AGL's offer in the absence of a superior bid, board members saying they intend to accept the offer for their shares.
AGL already has entered into pre-bid agreements with Sydney Gas's two largest shareholders, AJ Lucas Group Limited and Babcock & Brown Ltd, totalling around 20 per cent of Sydney Gas.
AJ Lucas has indicated it intends to accept the offer for its remaining 5.2 per cent stake in Sydney Gas.
AGL is currently in joint venture with Sydney Gas to explore the CSG potential of the NSW Hunter Valley, north-west from Newcastle.
AGL said the takeover would deliver highly prospective exploration acreage in close proximity to AGL's core NSW gas market, and deliver full operational control of permits across the Sydney and Hunter basins.
"Combining this acquisition with our recent purchase of the Gloucester Basin acreage will give us the opportunity to further increase our ownership of gas reserves in our core NSW market,'' AGL managing director Michael Fraser said in a statement.
"The concurrent development of the Camden, Hunter and Gloucester gas projects will provide AGL with strategic benefits, optionality and a substantial source of long term wholesale gas supplies.''
The acquisition will be funded by cash reserves, AGL said, and have no material impact on its net profit after tax guidance for the 2009 financial year of between $370 million and $400 million.
ABN AMRO Corporate Finance has been engaged as the financial adviser, and Gilbert and Tobinas the legal advisers.
Sydney Gas (sgl.ASX:Quote,News) shares last traded at 27.5 cents.
Home loan troubles break records again
Shares up as miners gain
Resources pull share market lower
Gaylord denies bid for control
