Nexus dismisses talk of $480m Shell takeover offer

OIL and gas explorer Nexus Energy has rejected speculation that Royal Dutch Shell is poised to take it over, saying it has not been approached by any party and is not in discussions about a potential deal.

By InvestSMART · 4 Aug 2010

By InvestSMART ·
4 Aug 2010

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Shares in Nexus soared almost 30 per cent after a newspaper report suggested its shareholders had been sounded out about a $480 million offer from Shell.

Shell is considered a natural acquirer because it has rights to Nexus's Crux field off the West Australian coast, with adjacent fields that could be used to feed its Prelude floating liquefied natural gas project.

About 80 million Nexus shares were traded yesterday, well above average for the stock, indicating that moves may be afoot for an acquisition.

"That is about 8 per cent of the shares, which is far too much to pass off on day traders, so it definitely seems that something is going on," a source said.

Nexus shares finished up 7?, or 23 per cent, at 37.5?.

Its company secretary, Susan Robutti, said it was aware of media reports of an imminent transaction. "In respect of these articles, Nexus advises that it has not been approached by any party, nor is it in discussions with any parties in respect of a takeover of the company," she said. "The company is not aware of any other reason for the price and volume change."

A Shell spokeswoman said the company did not comment on what it regarded as media speculation.

Nexus has been considered a prime takeover target since its refinancing troubles during the global financial crisis resulted in the dilution of ownership in core assets.

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Frequently Asked Questions about this Article…

Did Nexus Energy confirm a $480 million takeover offer from Royal Dutch Shell?

No. Nexus Energy rejected the takeover speculation. The company said it has not been approached by any party and is not in discussions about a potential deal, according to company secretary Susan Robutti.

How did Royal Dutch Shell respond to reports it was lining up a takeover of Nexus?

A Shell spokeswoman declined to comment on what it regarded as media speculation, so Shell did not confirm or deny the reported approach.

Why is Shell seen as a natural acquirer of Nexus Energy?

Shell is considered a natural acquirer because it holds rights to Nexus’s Crux field off the Western Australian coast, and adjacent fields could potentially feed Shell’s Prelude floating liquefied natural gas project.

How did Nexus shares react to the takeover rumours and media reports?

Nexus shares jumped sharply after the report. The article says shares ‘soared almost 30 per cent’ on the news and finished up about 23 per cent at 37.5, with roughly 80 million shares traded—well above the stock’s average volume.

What did the unusually high trading volume in Nexus shares indicate?

About 80 million Nexus shares changed hands—roughly 8 per cent of the company’s stock—which a source told the paper was ‘far too much to pass off on day traders’ and suggested that some form of acquisition activity might be under way.

Has Nexus been considered a takeover target before?

Yes. The article notes Nexus has been seen as a prime takeover target since refinancing troubles during the global financial crisis led to dilution of ownership in core assets.

Are there any confirmed takeover talks or official approaches reported?

No confirmed talks or approaches are reported in the article. Nexus explicitly advised it has not been approached and is not in discussions, and Shell declined to comment on the speculation.

What are the key facts everyday investors should note from this Nexus–Shell coverage?

Key takeaways from the article: Nexus has denied being approached about a reported $480 million Shell bid; Shell did not comment on the story; Nexus shares and volume spiked sharply after the report; Nexus holds Crux field rights that make it strategically interesting to Shell; and Nexus has been seen as a takeover target since its post‑GFC refinancing issues.