sellers are mad given bg is to bid for qgc, page-12

Less than two months after abandoning a $13.8 billion hostile tilt at Origin Energy, Britain's BG Group is poised to launch a $3 billion-plus friendly bid for its joint venture partner, Queensland Gas.

QGC and its largest shareholder, AGL Energy, this morning entered trading halts to discuss the details of the proposed deal.

The Herald understands a merger agreement could be announced as early as Monday. The deal would involve AGL agreeing to sell it 25 per cent stake in QGC to BG. In return, AGL would be granted the right to domestic gas supplies.

Last month, Credit Suisse analyst Sandra McCullagh said it would make sense for AGL to swap its equity stake in QGC for a deal under which it would purchase a sizeable amount of gas associated with the ramp-up of the $8 billion proposed liquefied natural gas joint venture between BG and QGC.

QGC recently moved to increase its available domestic gas supplies through a $895 million friendly takeover of Sunshine Gas. It has a 79% stake in Sunshine, which entered a trading halt yesterday alongside another QGC takeover target, Roma Petroleum.