The competition regulator says it will not oppose the $3.45 billion acquisition of coal seam gas producer Arrow Energy by Royal Dutch Shell and PetroChina. Given competing gas suppliers and abundant gas reserves, the proposed acquisition was unlikely to substantially lower competition, the Australia Competition and Consumer Commission (ACCC) said this morning.
The ACCC's green light clears one of the major regulatory hurdles but the deal still requires the approval of Australia's foreign investment watchdog, shareholders, and the courts. It also requires an independent expert's report finding the takeover offer to be in the best interests of Arrow shareholders. A spokesman for the Shell/PetroChina joint venture vehicle said last week it had submitted an application to the Foreign Investment Review Board (FIRB) in early April and the review could take between one to four months.
An Arrow shareholder vote on the deal is expected in mid-July. Shell and PetroChina are offering $4.70 a share for most of Arrow's domestic coal seam gas assets. Arrow shareholders are also set to receive one share in a new Australian-listed company, Dart Energy, for each of their share in Arrow. Dart Energy will hold all of Arrow's existing coal seam gas assets overseas as well as the gas fields in New South Wales.