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Petroleum

Woodside Petroleum Rejects Shell's Latest Offer

Strategic Insights

— 2 min read

Woodside Petroleum has rejected Royal Dutch/Shell's latest bid for the company, stating that it falls short of the independent expert's assessment of the company's fair market value. According to an independent appraisal by Deloitte Corporate Finance, the fair market value of Woodside is between A$16 and A$18 per share, significantly higher than Shell's offer of A$14.80 per share. The company's Managing Director, John Akehurst, stated that the offer is "neither fair nor reasonable" and that the assets to be transferred to Woodside would be "rigorously assessed" before the shareholder vote.

Key Takeaways:

  • Woodside Petroleum's independent appraisal by Deloitte Corporate Finance valued the company's fair market value at between A$16 and A$18 per share.
  • Royal Dutch/Shell's offer of A$14.80 per share is 8%-22% below the independent expert's assessment.
  • The offer includes a transfer of assets to Woodside, including some in the deepwater Gulf of Mexico, which would be "rigorously assessed" before the shareholder vote.
  • Woodside Managing Director John Akehurst stated that the offer is "neither fair nor reasonable" and that the assets to be transferred would be evaluated carefully.
  • Analysts, including John S. Herold's Lysle Brinker, expect Shell to "sit tight and wait until the shareholder vote".
  • Woodside's partners in the North West Shelf Venture, including BP, Chevron, BHP, and Japan Australia LNG, have their own merger activities that may hinder them from making a rival bid for Woodside.

Statistics:

  • A$16 to A$18 per share: the estimated fair market value of Woodside Petroleum according to Deloitte Corporate Finance's independent appraisal.
  • A$14.80 per share: The offer made by Royal Dutch/Shell.
  • 8%-22%: The range by which Shell's offer falls short of the independent expert's assessment.
  • 53%-101%: The average premium over share price paid in recent takeovers in Australia's resource sector.
  • 4% to 10%: The range of premium offered by Shell compared to the benchmarks mentioned above.
  • 48%: The average premium paid one month before a bid for global oil and gas companies.
  • 43%: The average premium offered in cash bids for large companies worldwide with market values of $2 billion or more.
  • 19% and 26%: The premiums over share price one month and two months before, respectively, where the bidding company had a substantial interest in the target company.

Sources:

  • "Woodside says Shell's offer still falls short" by Paul Merolli, Oil Daily, November 28, 2000, page 1.

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