Royal Dutch Shell (NYSE: RDS.A) said Tuesday that it will sell the majority of its stake in Australia’s largest independent oil and natural gas producer, Woodside Petroleum, in a deal worth about $5 billion after taxes.
Shell is selling an 18.6 percent stake in Woodside, shrinking its holding to 4.5 percent from 23.1 percent.
Woodside will buy back 78.3 million of its shares from Shell, a 9.5 percent stake, at $34.28 per share, a discount of 15 percent on the closing price of Woodside’s shares on Monday. Then by Wednesday, Shell will sell another 78.3 million shares to institutional investors at $41.35 a share, a 3.5 percent discount on Monday’s closing price. Woodside’s stock is expected to begin trading in Sydney again on Wednesday.
The deal gives shareholders more certainty about Shell’s shareholdings. When Shell began reducing its stake in Woodside in 2010 by selling a 10 percent stake in the company, investors became uncertain about the use of Shell’s capital.
“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’s chief executive, Ben van Beurden, said Tuesday in a statement. “It doesn’t change our view of Australia as an important player on the global energy stage, or Shell’s central role in the country’s energy industry.”
“We continue to see Australia as an important place for us to invest and grow our business,” Shell’s Australia Country Chair Andrew Smith added.