* Buyback fails to win 75 percent support
* Shell left with 13.6 pct stake in Woodside
* Woodside opposes buyback to all shareholders on same terms
* Woodside shares fall 1.8 pct
(Adds Shell comment)
By Sonali Paul
MELBOURNE, Aug 1 Woodside Petroleum Ltd
failed to win shareholder approval to buy back $2.68 billion of
its shares from Royal Dutch Shell Plc, Australia's top
oil and gas company said after a vote on Friday.
Defeat of the buyback leaves Shell holding a 14 percent
stake in Woodside that it intends to sell, which will continue
to weigh on the Australian company's shares, an overhang
Woodside was trying to remove.
The buyback won 72 percent support but needed 75 percent
approval to go ahead, Woodside said. Its shares were trading
down 1.8 percent at A$41.76 after the final vote count was
released, in a broader market down 1.5 percent.
Shell, a long-time investor in Woodside, was aiming to sell
down its stake from 23.1 percent to 4.5 percent as part of a
series of global asset sales to help cut soaring costs and boost
returns to shareholders.
Half of the share parcel was sold to institutions, while
Woodside planned to buy back and cancel the remaining 78.3
million shares in a bid to smooth the impact of Shell's
However, the buyback was opposed by some investors as it did
not treat all shareholders equally and would have given Shell
access to A$1 billion ($929 million) in tax credits coveted by
Woodside chairman Michael Chaney acknowledged the issue
ahead of the vote, telling a shareholders meeting the board had
not been looking for the best way to execute a buyback.
"The buyback was merely an efficient mechanism to assist
with the exit of Shell from the register and the only option
available to achieve our aim," Chaney said.
Shell said following the vote that it is "reviewing its
options in relation to its remaining 13.6% holding in Woodside."
One investor that opposed the plan, Plato Investment
Management, said the deal discriminated against Australian
pension funds and charities, who would have had more to gain
than Shell from the local tax credits.
"If the selective buy-back is not approved, we will lobby
Woodside to undertake an open access buy-back on broadly similar
terms to the selective buy-back," Plato said on its web site
Chaney said a broader buyback was not the answer and did not
spell out an alternative plan, adding only that the board would
continue to review the company's capital position.
"An equal access off-market buyback would involve less
certainty regarding the price and quantum of the buyback
depending on shareholder participation and would not provide an
orderly reduction of Shell's shareholding in Woodside," he said.
Shell has long flagged it wanted to sell its stake in
Woodside, part of a long retreat from a company it tried to take
over in 2001. Chief Financial Officer Simon Henry told reporters
on Thursday that Shell was not dependent on the buyback going
ahead to meet its target of selling $15 billion in assets.
He said Shell would take its time to consider its options if
the Woodside sale did not go ahead.
Shell already sold a 9.5 percent stake to institutions in
June for A$3.24 billion. The buyback would have taken the total
to $5.7 billion.
($1 = 1.0764 Australian Dollars)
(Reporting by Sonali Paul, additional reporting by Ron Bousso;
Editing by Richard Pullin and Elaine Hardcastle)