Arrow may reject $3 billion PetroChina - Shell takeover offer

Chinese state owned petroleum major PetroChina and Royal Dutch Shell may see their $3-billion takeover offer for Australia's coal seam gas (CSG) developer and producer Arrow Energy Ltd being rejected, according to the Australian Financial Review.

The paper said, without revealing how it got the information, that Arrow was likely to reject the offer as too low, which would make both oil majors hike up their bid.

This month, Royal Dutch Shell, the Anglo Dutch major that already holds a 30-per cent stake in Arrow's domestic assets, and Beijing-based PetroChina, which recently became the first company with a $1-trillion market capitalisation, made a joint $3-billion bid for Arrow Energy Ltd, an emerging Australian leader in coal seam gas (CSG) development. (See: PetroChina, Royal Dutch Shell bid $3 billion for Australia's Arrow Energy)

The $3-billion bid valued Arrow's shares at $4.45, a 28 per cent premium on March first week's close of $3.48.

With a string of analysts commenting that the offer of $3 billion was too low and Arrow taking more than a week to commit, suggests that the company is likely to reject the offer.

Analysts suggest that an offer of A$5 would be in order since the takeover would give PetroChina and Shell control of 37 per cent of Australia's coal seam gas reserves.