Shell, PetroChina bid for Arrow Energy gets Australian approval

The A$3.5 billion ($3.2 billion) takeover bid for Arrow Energy Limited (Arrow), an emerging global leader in coal seam gas (CSG) development, by oil giants Royal Dutch Shell Plc (Shell) and PetroChina Company Ltd (PetroChina) has got the green light from Australia's Foreign Investment Review Board (FIRB), thus clearing a major regulatory hurdle to continue the process.

The takeover will be executed through CS CSG (Australia) Pty Ltd (CSCo), a 50:50 joint venture company owned by Shell and PetroChina.

The FIRB approval will now allow CSCo to request regulatory approvals from Chinese authorities, Brisbane-based Arrow said Friday in an announcement to the Australian Stock Exchange (ASX).

Simultaneously, Arrow proposes to demerge its international and certain Australian businesses and create a new entity, Dart Energy Limited (Dart) which is expected to be listed on the ASX in July.

The demerger and acquisition schemes would allow Arrow's shareholders to get one share in Dart and A$4.70 in cash for each Arrow share they hold.

In March, Shell and PetroChina had raised their bid for Arrow Energy to A$4.70 per share or A$3.5 billion from the earlier A$4.45 per share or A$3.2 billion, which was unanimously recommended by the company's board to its shareholders. (See: Shell, Petro China seal Arrow Energy acquisition with $3.2 billion revised offer)

The acquisition will allow Arrow shareholders to realise a significant premium to the Queensland CSG assets through their shares.

Dart's assets will include Arrow's 90 per cent interest in Arrow Energy International Pte Ltd which holds the existing portfolio of assets in China, India, Vietnam and Indonesia (the remaining 10 per cent is being held by Shell), and its certain stakes in few ASX listed companies.
Arrow's CEO and managing director Nick Davies said, ''Today's announcement brings us one step closer to realising significant value for Arrow shareholders through the monetisation of Arrow's Queensland coal seam gas assets while retaining significant upside through exposure to Dart's outstanding portfolio of assets in Asia and Australia''.