Woodside to Buy Back Shares from Shell

LNG player Woodside said it has signed a binding buy-back agreement with Shell Australia to purchase 78.3 million Woodside shares from Shell via a selective buy-back at a price of US$2,680 million. This represents approximately 9.5% of Woodside’s issued share capital.

The proposed buy-back price of US$2,680 million payable by Woodside is based on a share price of A$36.49, representing a 14% discount to the volume weighted average price of Woodside shares over the five trading days up to and including Monday 16 June.

In conjunction with the buy-back, Shell has also entered into an agreement to sell another 78.3 million shares, representing 9.5% of Woodside’s issued capital, via an underwritten sell-down to institutional investors at A$41.35 per share. It is expected that the sell-down will complete by Wednesday 18 at 10am AEST, at which time Woodside shares will resume trading.

Shell’s holding in Woodside would reduce from its current 23.1% of Woodside’s issued capital to a maximum of 4.5% following completion of the selective buy-back and sell-down.

The buy-back is subject to Woodside shareholder approval, an independent expert providing an opinion hat the transaction is fair and reasonable to all Woodside shareholders (other than Shell and its associates), and consent under a number of Woodside’s facility agreements.

Woodside’s Board of Directors recommends that shareholders (excluding Shell and its associates) vote in favour of the selective buy-back, subject to the independent expert concluding it is fair and
reasonable to shareholders (excluding Shell and its associates). Haynes and Jamieson, who were originally nominated by Shell, abstained from voting.

Woodside CEO Peter Coleman said the combined transaction would deliver real value to Woodside shareholders through enhanced earnings per share, cash flow per share and dividends per share.

“This combined transaction is an efficient and disciplined use of capital and creates value for all our shareholders,” Coleman said.

The buy-back price includes a capital component of US$7.95 per share with the remainder of the buy-back price comprising a fully franked dividend. Following the proposed selective buy-back. Woodside will continue to retain a substantial franking credit balance of US$1,878 million.

The proposed selective buy-back will be funded from a combination of Woodside’s existing cash and debt facilities and is not expected to impact Woodside’s current credit rating. Woodside will continue to target a strong investment grade credit rating. Woodside plans to continue its practice of an 80% dividend payout ratio for the foreseeable future, subject to the demands of significant new capital investments or if business performance or external circumstances change materially. The transaction is expected to increase the amount of future dividends per share above what they would be in the absence of the transaction.