Shell bid to control Woodside fails

The Australian oil and gas producer Woodside Petroleum has declared unacceptable an assets-for-shares swap proposed by Royal Dutch/Shell that would give the oil giant control of Woodside.

The Australian oil and gas producer Woodside Petroleum has declared unacceptable an assets-for-shares swap proposed by Royal Dutch/Shell that would give the oil giant control of Woodside.

Woodside's independent directors said yesterdaythat the plan would not add to earnings per share and did not offer shareholders an adequate premium. The proposal would allocate Woodside a portfolio of Shell's upstream assets in Australia, New Zealand and Iran in exchange for 429 million shares that would boost Shell's stake in Woodside from 34.27 to 60 per cent. Woodside said the assets did not provide the strategic diversity from the company's existing assets that it had been seeking from new acquisitions.

Woodside's reaction had been expected by analysts, who predicted Shell would return with an improved offer.

"The non-Shell appointed directors consider the proposal falls well short of any proposal that could be accepted and recommended to shareholders," Woodside said in a statement. Shell yesterday said it was disappointed at the Woodside decision and would consider what action to take.

"The shareholders should have been given the opportunity to consider an independent expert's report and vote on the proposal," Shell International exploration and production director Raoul Restucci said.

Wilson HTM senior research analyst for oil and gas, Andrew Williams, expected Shell to come back with an improved offer. He said it was also likely Woodside wanted more oil assets, compared to the gas dominated assets that have been offered. "I can't see Shell walking away at this point of time. They have basically played their hand, they want to take control of this company."