Investors in Woodside Petroleum will have to contend with the confirmation last night that Shell is about to sell most of its holding, with the rest not to far behind.
Shell announced in London that it had agreed to sell down almost two thirds of its remaining stake Woodside Petroleum for $US1.7 billion ($A2.2 billion).
The Anglo-Dutch energy company said in its statement it had entered into an underwriting agreement with two investment banks to sell 71.6 million shares — 64% of Shell’s interest and 8.5% of Woodside’s issued capital — at a price of $A31.10 a share, a 3.5% discount to Woodside’s closing price on the ASX on Monday of $32.24.
Shell once owned a third of Woodside. But in 2010, it sold a 10% stake, and a further 9.5% in June 2014. Shell was blocked from taking over Woodside by then Treasurer, Peter Costello in a bid worth $US5.1 billion.
It will retain a 4.8% interest after the latest deal completes on later and has agreed not to sell any of its remaining shares for a minimum of 90 days.
After being diluted further because of a decision not to participate in Woodside’s dividend reinvestment programme, and what Shell said was a “change in Shell’s level of involvement over Woodside’s financial and operating policy decisions”, management concluded last year that Shell “no longer [had] significant influence”.
The disposal will help reduce net debt, is part of a $3US0bn divestment by Shell as it seeks to improve its financial performance.