Japanese company Mitsui has sparked a bidding war for oil and gas explorer AWE with a $600 million cash takeover offer.
Mitsui has made an unsolicited, non-binding and conditional offer for 100 per cent of AWE at 95 cents a share, or $602 million, about a 14 per cent premium on the existing $526 million proposal between AWE and bidder Mineral Resources.
The deal is dependent on the termination of the takeover process between AWE and Mineral Resources by February 2.
The proposal is not conditional on due diligence, financing or internal approvals and is understood to already have obtained backing from the Foreign Investment Review Board.
As the deal is an off-market takeover bid, it only requires a minimum of 50.1 per cent of shareholder acceptance to pass.
The AWE board has recommended shareholders take no action in regards to the offer.
This new proposal marks the third takeover bid for AWE in as many months.
Late last year, a bidding war erupted between Mineral Resources and China Energy Reserve and Chemical Group as they sought to gain control of AWE's major asset, the Waitsia gas project. The fight for control drove the AWE's share price from a low of 41 cents in June 2017 low to 87 cents a the end of December. AWE's share price spiked 14.35 per cent on news of the offer, rising to 98 cents.
Min Res beat out its rival with an eventual offer of 83 cents a share, which included a mix of cash and scrip.
The rival bid on the table from CERCG was an all-cash offer of 73?? a share, or $463 million.
A source close to AWE said the Mitsui offer had come out of the blue.
"There was no discussion with Mitsui for a takeover proposal, as since signing the scheme implementation deed with Min Res we had a no-shop agreement. We just received the offer on Sunday, it was not telegraphed before that," he told Fairfax Media.
He described the new offer as "very clean and very significant".
"The big question mark is over whether Min Res or CERCG [will] come back with an improved bid."
RBC Capital Markets analyst Ben Wilson said: "The Mitsui cash bid is relatively clean."
"While there is a break fee of $5.2 million potentially payable by AWE to Min Res, our reading of the scheme deed suggests this may not be payable in the event of a superior proposal and in any case it is minor in the context of the quantum of the bid."
Mr Wilson maintained an unrisked valuation of around $1.10 a share for AWE.
Fat Prophets analyst David Lennox said it appeared a bidding war may be up and running once more.
"It's in play again, and at that sort of price it's a pretty good value for AWE," he told Fairfax Media.
"All you can say is, it's nice if you're an AWE shareholder."
Mr Lennox believed it was unlikely CERCG would come back with a renewed bid.
Mitsui is familiar with Australia's energy landscape, operating in the offshore oil and gas, and LNG markets.
Mitsui also has a history with both the Waitsia asset and AWE.
The Japanese firm had previously made a bid for Waitsia when it was owned by Origin.
Mitsui is understood to have partnered with AWE to make a bid of around $200 million for full control of Waitsia.
Mitsui has also worked with AWE on its Bass Strait Casino project.
Mineral Resources declined to comment, while CERCG had no comment to add.