Woodside Petroleum Rejects Shell's Merger Proposal

Sydney-based Woodside Petroleum Ltd's (ASX:WPL) independent directors have advised shareholders to reject Shell Australia Investments Ltd's merger proposal, citing the offer price as "neither fair nor reasonable". The revised deal includes a cash offer of $14.80 per share and a portfolio of assets worth up to $7.3 billion. Woodside's chairman, Charles Goode, emphasized that the offer does not contain a sufficient premium for a change in control of the company.

Key Takeaways:

Woodside's independent directors have recommended shareholders reject Shell's merger proposal due to the offer price being deemed "neither fair nor reasonable".
The revised deal includes a cash offer of $14.80 per share and a portfolio of assets worth up to $7.3 billion.
Three Woodside directors associated with Shell have not made a recommendation on the proposal.
Deloitte Corporate Finance Pty Ltd's independent valuation concluded that Shell's offer was inadequate.
Deloitte's fair market value estimate for Woodside is between $16 and $18 per share, based on assumed future oil prices.
The assumed future oil prices used in the valuation are below OPEC's declared target range for crude oil prices.
Woodside's chairman, Charles Goode, reiterated that shareholders should reject the offer and consider the company's long-term prospects.

Statistics:

Cash offer: $14.80 per share
Portfolio of assets: up to $7.3 billion
Deloitte's fair market value estimate: $16-$18 per share
Assumed future oil prices: $US21 per barrel in 2005, increasing to $US23 per barrel by 2010 and then by an inflation rate of 2.5% thereafter
OPEC's declared target range for crude oil prices: $US22-$US28 per barrel

Sources:

[Woodside Petroleum Ltd's (ASX:WPL) target statement]
[Shell Australia Investments Ltd's merger proposal]
[Deloitte Corporate Finance Pty Ltd's independent valuation report]
[OPEC's official website, cited by Woodside's chairman as a reference for crude oil prices]