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Woodside withdraws from Oil Search takeover

Xinhua, December 8, 2015 Adjust font size:

Australia's largest independent oil and gas company Woodside Petroleum has backed away from its takeover of Papua New Guinea centric Oil Search, three months after the initial bid was rejected.

Oil Search rejected the initial 11.6 billion Australian dollar (8.41 billion U.S. dollar) all-script takeover offer - one Woodside share for four Oil Search shares - in September, claiming it grossly undervalued the company.

Woodside was given the option to either increase its bid or propose a merger option, however the company advised Oil Search's board it has withdrawn its bid.

"Woodside is not pursuing any alternative transactions to combine the businesses," Woodside said in a statement to the Australian Stock Exchange on Tuesday.

Oil Search's shares have tumbled as far as 18 percent since the news broke before local trade on Tuesday, after climbing 12 percent from when the merger, Asia's largest energy takeover in history, was proposed.

At 12:25 local time, Oil Search was trading at 6.34 Australian dollars (4.60 U.S. dollars) per share, down 1.18 Australian dollars (86 U.S. cents), or 15.69 percent, from the closing of the local market on Monday.

Woodside had sought a stake in Papua New Guinea's liquefied natural gas industry, arguably the world's lowest cost developments that are still economically viable despite the plunge in oil prices.

Woodside's chief executive Peter Coleman had previously said the company did not want to include cash in any offer on top of its one to four share ratio as that would have been "dilutive to our shareholders" if oil prices continue to fall.

Analysts claimed Woodside would have to offer between nine and ten Australian dollars (6.53 U.S dollars - 7.25 U.S. dollars) per share, or 13 billion Australian dollars (9.43 billion U.S. dollars), to win over Oil Search's shareholders, which include the Papua New Guinean government.

Brent crude prices have fallen almost 50 percent this year as members of the Organization of Petroleum Exporting Countries have broken their production ceiling, flooding the market to maintain market share and stave off competition from outside producers.

At 12:25 local time, Woodside Petroleum was trading at 26.89 Australian dollars (19.50 U.S. dollars) per share, down 1.11 Australian dollars (81 U.S. cents) or 3.96 percent, from Monday's closing. Enditem