Oil Search, a Papua New Guinea natural gas producer, rejected a multi-billion all-stock takeover bid by the Australian oil and gas producer Woodside Petroleum.
In an ASX Announcement, the company said that Woodside’s proposal bid undervalues the company’s liquefied natural gas expansion plans in Papua New Guinea. Woodside had offered one of its shares for every four Oil Search shares.
“Following a detailed evaluation of the Proposal, the Board has concluded that the Proposal is highly opportunistic and grossly undervalues the Company. Since receiving the Proposal, the Company has undertaken substantial shareholder engagement. The overwhelming feedback has been that this Proposal has little merit. Oil Search is pure PNG oil and gas play with clear growth opportunities and an excellent track record of delivery. The Proposal would significantly alter the fundamental characteristic of an investment in the Company and dilute the present growth profile available to its shareholders,” the company said.
“The Board of Oil Search believes our Company is in a very strong position, both operationally and financially. We have a low cost, high quality, production base which is generating strong cash flows and excellent growth opportunities, with the proposed PNG LNG Train 3 and Papua LNG among the most competitive new developments in the world. Oil Search provides its shareholders with a pure exposure to PNG and is fully committed to PNG. Our focus is on continuing to build and create shareholder value through the Company’s strong future growth prospects,” said the Company’s Chairman, Mr Rick Lee.
Woodside Petroleum expressed its surprise and disappointment that Oil Search rejected its $11.6 billion takeover bid.
“Woodside is surprised and disappointed that the Board of Oil Search has rejected the proposal without meeting with Woodside to understand the benefits of the opportunity or to negotiate the terms of a possible merger,” the company said in an ASX Announcement.
“Woodside believes the proposal would create the regional oil and gas champion for both Papua New Guinea and Australia with a global portfolio of world class assets and development opportunities which would deliver significant benefits to both companies’ shareholders.”