DataRoom AM: Woodside’s war chest

Woodside’s exit from the Leviathan project raises questions as to where its mammoth cash pile will be spent, while Aurora shareholders give the nod to a sweetened takeover offer.

The on-again, off-again entrance of Woodside Petroleum into Israel’s offshore gas sector is officially off, leaving questions as to what the WA firm will use its cash pile on -- a takeover perhaps?

Elsewhere, Aurora Oil and Gas falls into the hands of Baytex Energy, the dual-track sales process for Peters Ice Cream is progressing smoothly and Nathan Tinkler finds a way to fund his renewed appetite for coal.

Woodside Petroleum has finally pulled the pin on plans to buy into the Leviathan project in Israel. The oft-delayed $3 billion entry was first negotiated in December 2012, but a series of niggling regulatory and pricing disputes halted progress on a final deal before a Woodside request for a go-slow on development plans was allegedly the last straw for its potential partners. The mammoth project was seen as a rare medium-term growth opportunity for the WA-based energy giant, with the firm now left pinning all its hopes on the Browse LNG project.

Analysts are calling for the cash put aside for Leviathan to be returned to shareholders through a special dividend, but in light of the aforementioned problem, expect acquisitions to be the order of the day. One possibility, according to The Australian Financial Review, is an $11bn purchase of PNG-focussed Oil Search, with informal talks allegedly held twice between the firms. However, Woodside might be more inclined to focus on regions with less sovereign risk.

Also in energy, Aurora Oil and Gas shareholders have thrown their weight behind a sweetened $1.88bn takeover offer from Canada’s Baytex Energy. Baytex first lodged its bid in February, before lifting its offer by over 2 per cent last week ahead of the crucial shareholder vote.

Meanwhile, the dual-track sales process for Peters Ice Cream is ramping up as owner Pacific Equity Partners looks to divest the asset prior to the end of the financial year. According to the AFR, a trade buyer -- previously rumoured to be France’s R&R -- is in the box seat for a deal, but PEP is testing the interest of fund managers in a $400 million-plus float with a prospectus ready for release next week.

Also in the IPO market, PEP's catering firm Spotless Group has raised $1bn through its IPO, usurping recent ASX market entrant Genworth Australia as the largest float of the year. It is due to list tomorrow, the same day as New Zealand education firm Intueri hits ASX boards for the first time.

In aviation, Etihad Airways boss James Hogan has said his firm has no intention to lift its stake in Virgin Australia above the 22.9 per cent it has regulatory approval to reach (it currently has 21.24 per cent). It appears Virgin’s largest shareholders -- EtihadAir New Zealand and Singapore Airlines -- have every intention to sit pat on their current stakes, but given the size of the three shareholders, expect takeover rumours to continue to circulate sporadically.

Finally, Nathan Tinkler has offloaded what was left of his battered Patinack Farm racing empire for an undisclosed fee, with the proceeds directed towards his recent re-entry into the Australian coal industry.

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