Australian oil and gas exploration and production company Woodside has launched a takeover offer for Oil Search.
In a statement issued Wednesday, the company said it had provided Oil Search a confidential and non-binding proposal to merge through a scheme of arrangement under the Papua New Guinea Companies Act.
Under the proposal, Oil Search shareholders would receive all scrip consideration of 0.25 Woodside shares for every Oil Search share and become shareholders in the combined entity. The proposal is subject to Papua New Guinea regulatory approval, completing satisfactory due diligence and other customary conditions.
According to Australian media reports the deal is worth A$11.6 billion ($8.1 billion)
In response to the offer, Oil Search issued a separate statement saying its board would review the proposal and update its shareholders in due course.
Oil Search said: “While Oil Search will consider the Proposal, it should be noted that Oil Search has a material equity position in the world class PNG LNG Project and attractive, low cost, LNG development opportunities, including the PNG LNG Train 3 expansion and the Papua LNG Project. This, combined with the company’s low operating cost producing assets, reserves upside, significant discovered resources and extensive and high quality exploration acreage position provide substantive scope for capital growth and position the Company to capitalise from a recovery in the oil price. Clearly, Oil Search shareholders are entitled to an offer which adequately reflects this value potential“
Woodside is being advised by Merrill Lynch, Gresham and Herbert Smith Freehills, while Oil Search has appointed Morgan Stanley as its financial adviser and Allens as its legal adviser.