Santos refers to the Oil Search ASX release this morning and ongoing speculation regarding a possible merger of Oil Search and Santos. In light of this, and in order to keep the market fully informed, Santos confirms that on 25 June 2021 it submitted a confidential, non-binding indicative all-scrip merger proposal to the Oil Search Board.
The Merger Proposal provides that the transaction would be implemented through a Scheme of Arrangement under which Oil Search shareholders would receive 0.589 new Santos shares for each Oil Search share held. Following approval of the Scheme, Oil Search shareholders would own 37 per cent of the merged group and Santos shareholders would own 63 per cent.
The ownership ratio implied a transaction price of A$4.25 per Oil Search share, based on Santos’ closing price on 24 June 2021. This represented a 12.3 per cent premium to the Oil Search closing price on 24 June 2021 of A$3.78 and a 9.8 per cent premium to the Mubadala block trade sale price of A$3.865.
On 9 July 2021 Santos received a letter from Oil Search which acknowledged the strengths of the combined company and the rationale for the Merger Proposal but noted that the proposal did not offer appropriate value for Oil Search shareholders or a basis on which discussions could be progressed. Santos has subsequently sought to engage the Oil Search board on the transaction rationale and the opportunity for Oil Search shareholders to participate in the value created by the merger.
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