Australia's AGL sees hurdles to hostile Origin bid

Sydney, Apr 22: Australia's largest energy retailer, AGL Energy Ltd. , said on Sunday a hostile bid for rival Origin Energy Ltd. was unlikely because of competition hurdles, but did not rule it out altogether.

Sydney-based AGL, which abandoned a proposed A$14 billion tie-up with Origin last month, said it would be difficult to make a bid without Origin's cooperation to help comply with anti-trust laws.

''We never reject anything out of hand but that (a hostile bid) would be a very difficult position to place our shareholders in at this moment in time, opening ourselves up on two open fronts,'' AGL Managing Director Paul Anthony told Australian Broadcasting Corp (ABC) television.

Anthony also did not rule out a takeover for Australian oil and gas producer Santos Ltd. to raise its gas equity position, but said a 15 percent cap on individual shareholdings allowed in Santos would make it difficult.

''That's a complex one because of the 15 percent withholding limit on their share register. There are numerous possibilities for us to get there,'' he told the ABC's Inside Business programme.

AGL has been aggressively boosting its stakes in gasfields and has bought several power assets to increase market share, spending A$1.95 billion on acquisitions since November.

AGL wants to increase its retail base to about 5 million customers from 4.1 million currently over the next 3-5 years.

Anthony said it could achieve that target through organic growth, even without the sale of the New South Wales (NSW) state electricity distribution system.

''We are very close to our goal. Can we get their organically? We think we can,'' he said.

Australian state governments, under budgetary pressure, are moving to privatise power assets.

AGL also has long-term targets to boost its clean burn gas and renewable generation to 5,000 megawatts, and raise its gas equity position to about 50 percent, or 4,000 petajoules.

''Do we need to do that overnight? No. We have sufficient gas reserves for the next 10-15 years. So, we have a bit of time to play out our strategy but like most business people i am impatient,'' Anthony said.

AGL, which last month bought a 27.5 percent stake in coal seam gas firm Queensland Gas (QGC) for A$327 million, has tipped a 15 percent rise in earnings per share in the medium-term.

Reuters