Energy utility owner DUET Group has begun a $1.67 billion capital raising to fund a takeover bid.
DUET has offered about $1.4 billion or $8 a share to take control of gas producer Energy Developments.
To fund the proposed acquisition, Duet has launched a fully underwritten $1.67 billion equity raising.
It plans to raise $550 million with a $2.02 per share offer to institutional investors and $1.12 million from an entitlement offer.
Energy Developments' board has recommended shareholders accept the proposal, with managing director Greg Pritchard describing it as attractive value.
"The proposal from Duet recognises the attractive growth outlook for the business, the strong operational performance and is a robust endorsement of management's ability to deliver against the strategic plan," Mr Pritchard said.
DUET's chairman Doug Halley said Energy Developments would be a strong strategic fit.
"(It) will enhance the diversity of our operating cash flows and provide an attractive source of growth for the group," he said.
Energy Developments uses waste gas, including gas from landfill, to supply power in Australia, the US, UK and Europe.
Its share price was up 23 cents, or nearly three per cent, at $7.95 at 1200 AEST.
DUET shares are in a halt and last traded at $2.38.
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