Woodside Petroleum will carry out a massive US$ 2.68 billion buyback of 78.3 million shares from Shell.
This move will see it regain control of approximately 9.5 per cent of its issued share capital.
The price is based on a share price of $36.49, and will be funded through existing cash and debt facilities.
In conjunction with the buyback Shell has also entered in to an agreement to sell another 9.5 per cent of Woodside’s issued capital to institutional investors at a price of $41.35 per share.
The sell-off will see Shell’s holding in the massive oil and gas company reduced from 23.1 per cent of Woodside’s capital down to around 4.5 per cent.
The Woodside buyback is subject to the company’s shareholders’ approvals, however the resources company’s board of directors have fully supported the purchase.
Woodside CEO Peter Coleman said the combined transaction would deliver increased value to shareholders, stating that “this combined transaction is an efficient and disciplined use of capital and creates value for all our shareholders”.
He went on to stat 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”.
Despite Shell pulling out of the energy company the two will continue to work together on their operations such as the North West Shelf, Browse, and Sunrise joint ventures.