Houston-based Tellurian Inc. announced Sunday that it agreed to sell itself to subsidiaries of Australia’s Woodside Energy Group Ltd. for $1 per share in an all-cash transaction worth $900 million.
The implied enterprise value of the transaction, including net debt, is around $1.2 billion.
Woodside said the deal represents an attractive entry into an LNG facility in Louisiana with more than $1 billion of expenditures incurred to date.
“The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” Woodside CEO Meg O’Neill said.
Woodside’s purchase represents a 75 percent premium over Tellurian’s closing price on July 19 and a 48 percent premium over Tellurian’s 30-day volume weighted average price. Tellurian said the premium reflects Driftwood LNG’s site, fully permitted status, advanced stage of pre-final investment decision (FID) development and relationships with Bechtel, Baker Hughes and Chart.
In connection with the deal, Woodside will provide a loan to Tellurian of up to $230 million to ensure Driftwood LNG site activity and de-risking activities maintain momentum before the transaction’s completion. The loan is secured by a first priority lien over the borrower’s assets and the latest maturity date for the loan is Dec. 15 or the date of the deal’s completion.
The deal is expected to close in the fourth quarter if it clears Tellurian shareholders and regulators.
Tellurian used Lazard as its financial advisor and Akin Gump Strauss Hauer & Feld as its outside counsel.
The Akin team was led by partner Jim Wetwiska, mergers and acquisitions partners W. Robert Shearer and Mary Lovely; executive compensation and employee benefits partner Stephanie Bollheimer; tax partner Alison Chen; counsel Leana Garipova, Dasha Hodge, Aaron Farovitch and Aaron Vera; and associates Michael Daus, Samir Halawi and Andrea Cabada.
Lazard’s outside counsel was Gibson, Dunn & Crutcher, including partner Hillary Holmes and associates Ashley Whittington and Mariana Lozano.
Woodside’s financial adviser is PJT Partners and its legal adviser is Norton Rose Fulbright.
Martin Houston, executive chairman of Tellurian’s board, said after careful consideration of Tellurian’s opportunities and challenges, “The board and senior management weighed an immediate and significant cash return against the risks and costs associated with the timeline to FID and determined that this offer is in our shareholders’ best interest.”
Houston added that Woodside is a “highly credible” operator, with better access to financial resources and a greater ability to manage offtake risk, “and I am confident it is the right developer to take Driftwood forward.”
Tellurian was co-founded by Charif Souki, who started Cheniere Energy before being forced out after a dispute with activist investor Carl Icahn in 2016. He was ousted from Tellurian in December when auditors raised doubts about the company’s ability to cover future expenses. Earlier this month Souki said he plans to raise $100 million from investors to buy a stake in Tellurian, according to a Bloomberg report.
This past May, Tellurian announced an agreement for Dallas-based Aethon Energy Management to acquire Tellurian’s integrated upstream assets for $260 million, alongside an agreement for Aethon to purchase 2 million tons per year of liquified natural gas from its Driftwood LNG plant. Lazard and Akin Gump also advised Tellurian while Gibson Dunn assisted Aethon.