WestSide of Australia said on Monday that it has rejected a takeover offer from Landbridge Group of China.
“WestSide’s board of directors has carefully considered the conditional offer for $0.40 per WestSide share contained in the bidder’s statement and is of the view that it does not represent fair value for the company as, amongst other things, it does not take adequate account of the value anticipated to accrue to WestSide on the terms of the recently announced gas sale agreement with the GLNG consortium (Santos, Total, Petronas and Kogas),” WestSide said in a statement.
The GSA is a binding 20-year agreement for the Meridian joint venture (in which WestSide has a 51 per cent operating interest) to sell gas to the GLNG project. This long-term agreement will enable the Meridian joint venture to sell up to 65 TJ/d of gas, which could monetize approximately 2 /3 of WestSide’s 2P reserves, or 1 /3 of its 3P reserves. The price of the gas is linked to the oil price, and assuming that current oil prices continue to apply the GSA would result in a gas price in excess of US$8.50/GJ from 2016. At the maximum production rate of 65TJ/d this could generate annual revenue to WestSide in excess of A$110 million assuming current foreign exchange rates.
“WestSide’s board of directors recommend that shareholders do not accept Landbridge’s conditional offer for $0.40 per WestSide share. The detailed reasons supporting this recommendation, which include the offer’s failure to adequately recognize the full value for shareholders from the GSA, will be provided in a target’s statement which is expected to be sent to shareholders later in May,” the company added.