Was it a cunning ploy by Woodside’s (WPL) board and management to release figures yesterday to the market suggesting the Shell franking credits/buyback deal, would fail at today’s special shareholders meeting in Perth?
A statement to the ASX yesterday revealed that only 71.3% of shares have been cast in favour of the $2.68 billion selective buyback from Shell, with $28.7% against the deal.
Seeing Woodside needs 75%, the deal looks lost.
It’s similar in some respects to the way some institutions opposed the restructuring of the Lowy family’s local and offshore shopping centre empire in late May.
After some hardline tactics from the Lowy family’s main company, Westfield, the revamp happened and the spin off company, Scentre was approved by securityholders in the old Westfield Retail Trust.
And in mid July, shareholders in David Jones easily approved the scheme of arrangement takeover by Woolworths of South Africa.
Woodside’s situation is different again – there’s no takeover activity, no dramatic restructure, but the selective buyback from Shell and the use of much of its franking credits has created controversy which has escalated in the past 10 days.
It’s unlikely Woodside will call off the meeting today, but it’s also likely that an adjournment could happen, especially if it can be shown that the company and Shell are working on another proposal.
But proxies can be changed up to the time of the meeting in Perth later today and some market analysts say the disclosure of the apparently lost vote looks like a ploy from Woodside to either get existing votes changed, or get more shareholders to the meeting to vote.
Woodside shares fell 0.8% yesterday to $42.52.
WPL 1Y – Woodside’s Shell deal poised
Many local institutions, which can access Woodside’s franking credits, are reportedly against the deal because the offer wasn’t made to all shareholders.
Woodside is using most of its available franking credits to help make the buyback happen and those institutions opposed to the buyback seem to resent that part of the deal.
If it is lost, there’s the possibility that Shell could sell to a third party, who might not be so friendly to Woodside.
Shell could place its 9.5% (or all of its stake of close to 15%) with local investors – later in the year once the $3.2 billion placement that occurred in June has settled down.
It was 1.8 times over-subscribed, so there’s demand for the stock.
Or Woodside could announce an across-the-board buyback incorporating a sale by Shell of its stake to investors buying into Woodside to get set for the buyback itself.
Under the existing deal, Woodside plans to buy back 78.3 million of its shares, or 9.5%, from Shell for $US2.7 billion ($A2.9 billion) or $A36.49 a share, if shareholders back the deal.
Another 78.3 million shares will be sold to institutional investors at $A41.35 per share. Shell will be left with 4.5% which could be sold by the end of the year if a deal can be done as soon as possible.
