Royal Dutch Shell is selling a major portion of its stake in Australia's Woodside Petroleum Ltd., raising AU$5.7billion. Shell is selling 9.5% back to Woodside, and another 9.5% to institutional investors, at a small discount to the closing share price on 16 June 2014. This will net Shell about $5billion, after taxes, and leaves the Anglo-Dutch company with as much as 4.5% of Woodside shares.
Woodside said it was buying back 78.3 million shares for US$2.68billion, and said the transaction "optimizes capital structure" and "removes uncertainty regarding Shell’s stake."
This is based on a share price of AU$36.49, a "14% discount to volume weighted average price up to and including 16 June 2014."
The price to institutional investors is higher: AU$41.35/share, according to Woodside.
Shell had already sold 10% of Woodside stock in November 2010.
The Woodside divestment is part of the company's plan to shed about $15 billion in global assets by the end of 2015; an attempt by Shell's new chief executive Ben van Beurden to to boost profits after years of spending.
Van Beurden said, "Today's announcement is part of our drive to improve Shell's capital efficiency and to focus our Australia growth in directly owned assets."
Shell has invested billions in Australia, at Chevron-operated Gorgon (Shell 25%) and its majority-owned (Shell 67.5%) Prelude floating LNG project off Western Australia. Shell also holds a 24.27% stake in the producing North West Shelf LNG project.
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