16 June 2014 23:52 GMT
Woodside was placed in a trading halt on Tuesday in anticipation of the sell-down.
The company announced Shell was carrying out an underwritten sell-down to institutional investors.
There is an agreement between the two companies that Woodside would also carry out a buy-back of shares, conditional on the outcome of the sell-down.
Shell is Woodside’s largest shareholder, with this deal set to slash 19% from Shell’s holding in the company.
Shell’s Australian outfit has brought on board two investment banks to sell about 78.27 million shares in Woodside, through an underwritten sell-down at a price of A$41.35 (US$38.6) per share.
Woodside will also carry out a buy-back of 78.27 million shares at a price of US$34.24 per share, which is expected to be completed in early August.
After the buy-back and sell-down, Shell’s share in the company will be below 5%.
Shell chief executive Ben van Beurden said the company’s decision was part of its shift of focus in Australia, putting its efforts into its directly-owned assets.
“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,” he said.
The sell-down will be carried out over the next 24 hours.
Shell has been progressively selling off its global assets, particularly in Australia to make its balance sheet leaner in the current market.
This deal was anticipated by a number of bankers and analysts late last year.
Shell sold a third of its Woodside holding in 2010, reducing that 34% stake to the 23.1% it holds now.
Woodside has recommended shareholders vote in favour of the buy-back, which chief executive Peter Coleman said would deliver value.
“This combined transaction is an efficient and disciplined use of capital and creates value for all our shareholders,” Coleman said.
“In parallel, it allows us to optimise the company’s near-term capital structure, while maintaining the capacity to continue to develop existing projects and make additional investments in new growth opportunities.
“The combined transaction will also increase our liquidity in the market and resolve the uncertainty in relation to Shell’s shareholding that has existed for several years.”
The company added this was not expected to impact the company’s credit rating and would preserve Woodside’s growth plan.
More to come...
