Oil Search Limited has rejected Woodside Petroleum’s $11.65 billion takeover.
The board of directors called the bid “highly opportunistic and grossly undervalues” the Papua New Guinea-based oil and gas company.
Chairman Rick Lee says Oil Search believes the 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,” he says.
“If any proposals are tabled in the future that reflect compelling value for Oil Search shareholders, we will engage on them. Clearly this proposal falls well short of that test.”
Under the Woodside offer, Oil Search shareholders would receive 0.25 Woodside shares for every Oil Search share, valuing the bid at $11.65 billion.
Woodside says it’s surprised and disappointed that the board of Oil Search rejected the proposal without meeting to understand the benefits of the opportunity or to negotiate the terms of a possible merger.
“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,” Woodside said in a statement.
Woodside has been buying assets in a depressed market. The company bought out Texas-based Apache Corporation’s interests in the Australian Wheatstone natural gas project, plus the Balnaves oil and the Kitimat gas projects in Canada for a total of US$2.75 billion (AU$3.348 billion).