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Queensland Gas Backs AGL Offer Over TCW Bid

Australian coal seam gas producer Queensland Gas reaffirmed on Friday its support for a bid by energy retailer AGL Energy, rejecting a A$812 million (US$639 million) rival offer from U.S. investment fund TCW Group.

QGC said that TCW's offer was a combination of 75% cash and 25% preference shares, and it was not known what value would be placed on the preference shares.

"If the consideration offered by TCW was cash alone, the TCW offer would be close to the bottom of independent expert Deloitte's 'fair and reasonable range' for majority control of A$1.49 to A$2.00 per share," QGC said in a statement. "The board sees no reason for changing its recommendation in favor of the AGL transaction."

QGC received an eleventh-hour takeover proposal from TCW on Wednesday, just two days before its shareholders were due to vote on energy retailer AGL's bid.

AGL is seeking a 27.5% stake in QGC through a share placement of A$1.44 a share. The bid also included a gas contract in which AGL would buy 540 petajoules of gas from QGC over 20 years. QGC said it would proceed with the extraordinary meeting on Friday.

TCW, a unit of France's Societe Generale Asset Management, is the third company to take an interest in QGC in recent months.

Oil and gas producer Santos initially bid A$606 million for QGC last October, but said last week it would not proceed following opposition from Australia's competition regulator.