Arrow Energy (ASX:AOE) Gets $3 Billion Bids from Shell and PetroChina
Monday, March 8th, 2010
Arrow Energy (ASX:AOE) received bids from state-managed PetroChina and Royal Dutch Shell to be taken over by the energy giants.
Based in Queensland, Australia, Arrow Energy produces coal and natural gas.
Australia in general has been resistant to doing deals with state-run Chinese companies, evidently the reason PetroChina has partnered with Royal Dutch Shell with this offer.
The $3 billion bid came as a joint effort and were not competing bids against one another, as it may sound.
Shell and PetroChina made the bid via a company they jointly own, with the bid equal to A$4.45 a share.
The market responded well to the bid, as Arrow Energy shares skyrocketed by over 46 percent. That seems to say investors believe the deal will be approved by all parties involved, including the Foreign Investment Review Board of Australia.
Arrow called upon its shareholders to hold back on taking any action, noting the deal was binding in any way and had conditions attached to it. Those particular conditions weren't mentioned by the company.
It could be that Arrow may be trying to get a little more out of the deal if everyone else can remain patient. But the possible profits could make that a difficult task to maintain.
Even so, expectations are indeed the final offering price could be higher, making if a very profitable deal for shareholders in Arrow Energy.
There is a political element in Australia in the deal as well, making it somewhat sensitive, as opposition has already called attention to selling Australian assets to a company like PetroChina, when it's effectively run by the Chinese government.
Article by Gary B
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: arrow energy , australia business , coal , natural gas , petrochina , royal dutch shell
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