QGC yesterday said it believed the offer had been driven by its rapid growth over the last few years.

“Until a detailed evaluation of the Santos offer can be completed and the market properly informed, the board strongly advises that QGC shareholders should take no action with respect to the bid,” QGC said.

“This bid corroborates the fact that QGC has, over the past two years, built an extremely important strategic position in the Australian gas market with an abundance of certified reserves and proven deliverability.”

The company said it wanted to make sure its shareholders fully appreciate the potential value of QGC’s assets.

“The QGC board considers the outlook for the company to be very exciting in both the near and long term,” it said.

Santos yesterday launched the takeover bid, offering $1.26 cash per share, valuing QGC at $606 million.

It also represented a 47% premium to the volume weighted average price of 86c over the last three months.

Santos said the offer represented a 24% premium to QGC’s closing share price of $1.02 on Tuesday.

Santos, which is making the bid through its wholly-owned subsidiary Santos CSG, currently owns 3.9% of QGC shares, including 1.9 million shares bought on-market on Wednesday.

In January, QGC launched its own unsolicited takeover bid for fellow CSM producer Sydney Gas. But after four months of hostile exchanges, QGC withdrew the offer, saying it no longer considered the company a “value proposition”.

Santos’ offer is subject to certain conditions, which include acquiring a minimum 50.1% shareholding. It intends to fund the transaction via a debt facility.

A bidder’s statement is expected to be lodged by Santos with the Australian Securities and Investments Commission next week.