Chinese Bidder Clears FIRB Hurdle in Race for AWE

China Energy Reserve and Chemical Group (CERCG) has been given approval by the Foreign Investment Review Board (FIRB) for its plan to acquire Australian oil and gas producer AWE, the takeover target announced on the Australian Stock Exchange December 22.

The news comes a day after AWE backed a rival takeover bid  by fellow Australian company Mineral Resources (MinRes).

RBC Capital Markets analyst Ben Wilson said that any competing bid by state-owned CERCG will need to be superior in matters including consideration, conditionality, funding, certainty, and timing to trump Mineral Resources’ bid of an implied A$0.83 ($0.64) a share.

“The implementation deed gives a right to respond to MinRes that enables it to make a counter proposal to any other offer made to AWE. If MinRes’ counter proposal is at least as favourable as or no less favourable than the other offer made, then AWE needs to use best endeavours to recommend MinRes’ counter proposal to shareholders,” he said.

“We think this further implies that CERCG would need to make a materially superior proposal, as otherwise MinRes could simply raise its current offer to match CERCG’s bid,” he added.