Beach Energy shares soared after billionaire Kerry Stokes sparked takeover talk by upping his stake in the group to nearly 14 per cent.
The 74-year-old has taken advantage of the diving oil price and its punishing effect on the share prices of energy producers such as Beach.
Mr Stokes' Seven Group Holdings has spent $179 million building its stake in Cooper Basin-based Beach to 13.79 per cent since the oil price started falling last year.
However it only confirmed this week that it had increased that shareholding from less than five per cent in the last few days.
Despite the view of some analysts that Beach Energy's market capitalisation on Tuesday of about $1.5 billion - similar to Seven's - and Seven's $1.1 billion of net debt made a takeover unaffordable, investors seemed to think differently.
Beach's shares shot up 15.75 cents, or 15.6 per cent, to $1.1675.
Seven would not confirm its intentions either way.
"We believe Beach Energy is well managed and has strong assets that are well-placed for increasing future energy demand," Seven chief executive Don Voelte said.
"Seven Group Holdings' investment in Beach Energy is consistent with its strategy of participating in high quality energy opportunities that will add shareholder value."
Beach's share price had dived more than 46 per cent in the last fiscal year, before reports emerged of Seven's interest in recent days.
Based in the South Australian Cooper Basin region, it already produces oil and gas and is considered well positioned to supply a looming east coast gas supply shortage.
OptionsXpress analyst Ben Le Brun said he thought acquiring Beach might be a bridge too far for Mr Stokes and was probably just a passive or blocking stake at this stage.
Seven recently won a bitter drawn-out legal battle to take over Nexus Energy for $200 million, as it seeks to make energy a key pillar along with its industrial, media services and other businesses.
"He's obviously been watching the oil price fall with his finger on the trigger ready to pull and he's chosen Beach at these very depressed levels," Mr Le Brun said.
"Who knows what his end game is, but it certainly adds an interesting dynamic if there is another suitor out there."
Share
