15July2013TheManagerCompanyAnnouncementsOfficeAustralianSecuritiesExchange20BridgeStSydneyNSW2000

AGLEnergyLimitedrecommendedoff‐markettakeoverofferforAustralianPower&GasCompanyLimited

Recommendedcashtakeoverofferat52centsperAPGshare AGLhasenteredintoagreementsfortheoutrightacquisitionof19.9%ofAPG'sissued

sharesfromAPG's3majorshareholders APG’s3majorshareholdershaveannouncedtheirintentiontoaccepttheOfferforthe

balanceoftheirshareholdings(~37%ofissuedshares)bynolaterthanthebusinessdayaftertheOfferbecomesunconditionalintheabsenceofasuperiorproposal

APG'sIndependentBoardCommitteerecommendsAPGshareholdersaccepttheOfferintheabsenceofasuperiorproposalandsubjecttotheindependentexpertconcludingtheOfferisreasonable

SeparaterecommendedOffertobemadeforAPGOptions(subjecttoobtainingregulatoryrelief).OptionOfferrecommendedbyIndependentBoardCommitteeintheabsenceofasuperiorproposalandsubjecttotheindependentexpertconcludingtheOptionOfferisreasonable.APGDirectorsandmajorshareholdersintendtoaccepttheOptionOfferbynolaterthanthebusinessdayaftertheOptionOfferbecomesunconditionalintheabsenceofasuperiorproposal

TheBoardofAustralianPower&GasCompanyLimited(ASX:APK)ispleasedtoannouncethatithasenteredintoaBidImplementationAgreement(BIA)withAGLEnergyLimited(AGL),underwhichAGL(throughawhollyownedsubsidiary)hasagreedtomakerecommendedcashoffersfor:

allofthesharesinAustralianPower&GasthatAGLdoesnotalreadyown(ShareOffer)at$0.52pershare(ShareOfferPrice);and

subjecttoAGLandAPGobtainingrequiredregulatorymodificationsandconsents,alloptionstosubscribeforAustralianPower&Gas’ssharescurrentlyonissue(OptionOffer)attheOptionOfferpricedetailedinSchedule5oftheBIA(OptionOfferPrice).

AGL’sShareOfferwillbeconditionaloncertainrequirements,including:

AGLhavingarelevantinterestinatleast90%oftheAustralianPower&GassharesbytheendoftheShareOffer;

ACCCnotificationthatitdoesnotintendtoopposetheacquisition;and

nomaterialadversechange.

TheconditionsfortheShareOfferaresetoutinSchedule2oftheBIA.AcopyoftheBIAisattachedtothisannouncement.

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TheShareOfferconsiderationof$0.52cashpersharetoAustralianPower&Gasshareholdersreflects:

asignificant33.3%premiumtotheclosingmarketpriceofAustralianPower&GassharesonFriday12July2013;and

asignificant51.2%premiumtothevolumeweightedaveragepriceofAustralianPower&GassharesinthethreemonthstoFriday12July2013.

TheOptionOfferconsiderationreflectsavaluationreportthatAGLhashadpreparedbyBDO,whichAGLintendstoincludeinitsOptionBidder'sStatement.

TheOptionOfferisconditionaloncertainregulatoryapprovalsandwillbeconditionalupontheShareOfferbecomingunconditionalandAGLhavingarelevantinterestinatleast90%ofOptionsattheendoftheOptionOfferperiod.

TheBoardofAustralianPower&GashasappointedanIndependentBoardCommitteecomprisingtwoDirectorswhohavecarefullyconsideredtheadvantagesanddisadvantagesoftheOffers.

TheIndependentBoardCommitteeunanimouslyrecommendsthat:

AustralianPower&GasshareholdersaccepttheShareOffer,intheabsenceofanysuperiorproposalandsubjecttotheIndependentExpertconcludingtheShareOfferisreasonable;and

ifAGLmakestheOptionOffer,AustralianPower&GasoptionholdersaccepttheOptionOffer,intheabsenceofasuperiorproposalandsubjecttotheIndependentExpertconcludingtheOptionOfferisreasonable.

AllDirectorsofAustralianPower&GasintendtoaccepttheShareOfferinrespectofanysharesheldorcontrolledbythembynolaterthanthebusinessdayaftertheShareOfferisorbecomesunconditional,intheabsenceofasuperiorproposal.IfAGLmakestheOptionOffer,allDirectorsofAustralianPower&GasalsointendtoaccepttheOptionOfferinrespectofanyAustralianPower&GasoptionsheldorcontrolledbythembynolaterthanthebusinessdayaftertheOptionOfferisorbecomesunconditional,intheabsenceofasuperiorproposal.

AGLhasannouncedtodaythatithasenteredintoagreementsfortheoutrightacquisitionof19.9%oftheissuedsharesinAustralianPower&Gasfromitsthreelargestshareholders–NipponGas,TheCobraGroup,andinterestsassociatedwithRichardPoole.EachoftheseshareholdershaveadvisedAustralianPower&GasthatitsintentionistoaccepttheShareOfferandtheOptionOfferinrespectofanysharesoroptionsheldorcontrolledbythembynolaterthanthebusinessdayaftertheShareOfferorOptionOffer(asapplicable)isorbecomesunconditional,intheabsenceofasuperiorproposal.EachoftheseshareholdershasauthorisedAustralianPower&Gastomakethisstatementoftheirintentioninthisannouncement.

BidImplementationAgreement

AGLandAustralianPower&GashaveenteredintoaBIAunderwhichthepartieshavegivencertainundertakingstoeachotherinordertofacilitatetheimplementationoftheShareOfferandtheOptionOffer(ifmade).

TheBIAcontainscertaintermsusualforatransactionofthisnatureincludingcustomarydealprotectionmechanismssuchas“noshop”,“notalk”and“noduediligence”restrictionsaswellasarightforAGLtomatchacompetingproposal.AbreakfeeisalsopayablebyAustralianPower&GastoAGLincertaincircumstances.

UndertheBIA,AGLwillnotberequiredtomaketheOptionOfferunlessitobtainstherequiredregulatorymodificationsandconsentsfromASIC.

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Transactiontiming

AGLhasannouncedthatitanticipatesitsBidder’sStatementwillbedespatchedtoAustralianPower&Gasshareholdersandoptionsholders(ifapplicable)byearlyAugust.AustralianPower&GaswilldispatchitsTarget’sStatementstoAustralianPower&Gasshareholdersandoptionholdersshortlythereafter.AustralianPower&GashasengagedGrantThorntonasIndependentExperttoconsidertheOffers.

AustralianPower&Gasshareholdersandoptionholdersarenotrequiredtotakeanyactionatthisstage.TheBidder’sStatementsandTarget’sStatementswillprovidedetailedinformationontheShareOfferandtheOptionOffer(ifmade),therecommendationsoftheDirectorsofIndependentBoardCommitteeandadvantagesandrisksassociatedwiththeOffers,andtheIndependentExpert’sReport.

Commentingontherecommendedoffer,AustralianPower&GasChiefExecutiveOfficerJamesMyattsaid:

“SinceestablishingAustralianPower&Gassevenyearsago,thecompanyhasrapidlygrowntobecometheleadingindependentenergyretailerinAustralia.Ourcustomerbaseofover354,000retailcustomershassubstantialstrategicvalue".

“TheOfferispricedatasignificantpremiumtothecompany’scurrentmarketpriceandvolumeweightedaveragepriceoverthepastthreemonths.ItrepresentsanattractiveopportunityinthecurrentmarketenvironmentforAustralianPower&Gasshareholderstorealisethevalueinherentinourbusiness.”

AustralianPower&GashasbeenadvisedbyArthurPhillip,FinflexandCorrsChambersWestgarth.

Forfurtherinformationpleasecontact:Corporate: Investorsandmedia:JamesMyatt RonnBechlerChiefExecutiveOfficer ManagingDirectorAustralianPower&Gas MarketEyeP:0289082700 P:0400009774AboutAustralianPowerandGas:AustralianPowerandGasCompanyLimited(ASX:APK)isAustralia’sleadingindependentASX‐listedenergyretailer,andoneofthecountry’sfastestgrowingcompanies.ItholdsafullsuiteofgasandelectricityretaillicencesinVictoria,NewSouthWales,ACT,SouthAustraliaandQueenslandandhasbeenapprovedtooperatebyAEMO,theAustralianEnergyMarketOperator.AustralianPowerandGaswasannouncedasthefasteststartingcompanyinthe2011BusinessReviewWeeklyAnnualFastStartersListforasecondyearinarow,andwasplacedfirstontheBusinessReviewWeeklyFast100listfor2010.

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