Woodside, Shell share-buyback falls through

Australia’s oil and gas company Woodside has informed that the company’s plan to purchase 9.5 percent of Woodside’s share capital from Shell has fallen through.

A meeting was held today in order for the Woodside’s shareholders to vote on a resolution to buy back approximately 78.3 million Woodside shares from Shell for a consideration of 2.68 billion US dollars.

Of the votes cast, 72% were for the buy-back, and 28% against. A 75% vote for was required for the resolution to be carried.

Prior to the meeting, Michael Chaney, Woodside’s Chairman explained the reasons for the buy-back plans.

He said: “Shell has been a major shareholder in Woodside for decades, with nominees on the Board, but as time has gone by, it has also become a significant competitor. This is an unusual situation for any company. In addition, it has been widely known in equity markets for some time that Shell planned to sell its
shareholding.

This created two concerns for the company. The first was what is referred to as an overhang on the stock – where investors are unwilling to buy shares in the market because they believe they may be able to do so at a lower price from Shell. In our discussions with investors over recent years, many expressed their concern about this.

The second issue was that if we were seeking to raise capital from shareholders at some stage, for example to finance an attractive acquisition, it may have been more difficult if our major shareholder was unlikely to commit more funds to the company.”

In a separate statement, Shell noted the voting results and said it was reviewing its options in relation to its remaining 13.6% holding in Woodside