Pipelines prowler lying low

The mystery prowler around the gas pipelines company NGC remained unidentified last night after failing to snare a 10 per cent stake to block energy giant Vector's takeover ambitions.

One of the top suspects in sharemarket chatter was failed NGC bidder Genesis Energy, a state-owned power retailer and generator. But chief executive Murray Jackson said: "Not us."

That will disappoint some sharemarket players anticipating keen entertainment if a state-owned venture were to be caught punting taxpayer money to block a takeover by another public entity, Vector.

An investment banker said: "It would be interesting, politically, if they had been dumb enough to have done this."

Adding to the mystery of the failed Thursday night bid to build a blocking stake was the price offered by sharebroker Citigroup - $3.22 a share, or only a 4 per cent premium on that day's closing price.

"Naive" was one assessment, meaning: far too low.

The suspect list in news reports has extended to Origin Energy, state-owned generators Meridian and Mighty River Power - or maybe an international hedge fund. Names were being plucked from that air.

Vector's offer to mop up the minority shareholders at $2.91 closed yesterday, doomed to fail.

NGC shares have traded above the offer price since the bid opened and closed yesterday at $3.13.

Vector bought Australia Gas Light's 66 per cent stake for $2.91 a share - or $877 million - last year but needs full ownership to integrate the businesses. That means getting to 90 per cent - the level for compulsory acquisition.

Citigroup called NGC investors, including Alliance Capital and Walker Capital, on Thursday in the hunt for shares.

At Alliance, fund manager John Norling said: "The whole game is to see how much more money you can get Vector to pay."

An attraction of NGC stock is the likelihood of Vector enticing minority shareholders with a follow-up takeover bid that includes rights to buy shares in its planned sharemarket float.

Vector has a one-year funding agreement for $350 million with investment bank ABN Amro as part of its NGC acquisition.

Norling said investors were betting the cost of the funding would encourage a float sooner rather than later - and that Vector wanted full ownership of NGC before that.

"They do seem to have somewhat painted themselves into a corner in terms of the timeframe they've given themselves."

Sharemarket sources confirm Brook Asset Management is the largest minority shareholder in NGC, with 3 to 4 per cent.

At Brook, principal Paul Glass said: "We do actually believe it makes a lot of sense for Vector and NGC to be put together because there are synergy benefits which we assess to be $20 million per annum."

By his calculation, that translated into $160 million of value for Vector.

"There are about 160 million outstanding NGC shares which Vector do not own, so there's up to $1 of value per share in those synergy benefits."