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Shell to sell stake in Woodside for $5 bn

JAMES PATON

THE HAGUE, NETHERLANDS (Bloomberg) -- Shell, is selling most of its stake in Woodside Petroleum for about $5 billion after tax as the company accelerates asset sales.

Shell is selling 78.3 million of its Woodside shares to investors and the Australian company plans to buy back the same amount of stock from Shell, said in a statement. That’s a total of about 19% of Woodside.

Shell flagged last year that it would eventually sell its 23% holding in Australia’s second-largest oil and gas producer because it was no longer strategic. Woodside, which operates the Pluto LNG project in Western Australia, closed at a three-year high.

“Woodside is master of its own destiny without that encumbrance,” Tim Schroeders, portfolio manager at Pengana Capital in Melbourne who helps oversee about $1.1 billion, said. “This breaks up an overhang people have been aware of for a long time and allows both companies to move forward with their own strategies.”

Woodside CEO Peter Coleman pressed Shell in February to take action on its stake, saying investors wanted “certainty.”

Government Block

The transactions follow Shell’s sale of a 10% stake in Woodside in November 2010 at $ 39.58 a share. It’s new stake will drop to a maximum of 4.5%.

In 2001, the Australian government blocked Shell’s takeover bid for Woodside. At the time, Woodside ran Australia’s only LNG plant and the government was concerned Shell would slow Woodside’s expansion by prioritizing other investments in Asia.

Shell has hired two investment banks to sell 78.3 million Woodside shares, or about 9.5% of the Australian company’s issued capital, at $ 38.76 each, about a 3.5% discount to close, while Woodside agreed to buy back the same number of shares for A$34.20 each, a 15% discount.

“The combined transaction will also increase our liquidity in the market and resolve the uncertainty in relation to Shell’s shareholding that has existed for several years,” Coleman said in a statement.

06/16/2014

 

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