Santos refers back to the ongoing hypothesis relating to a attainable merger of Oil Search and Santos. In gentle of this, and in an effort to preserve the market absolutely knowledgeable, 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 offers that the transaction can be carried out by means of a Scheme of Arrangement beneath which Oil Search shareholders would obtain zero.589 new Santos shares for every Oil Search share held. Following approval of the Scheme, Oil Search shareholders would personal 37 per cent of the merged group and Santos shareholders would personal 63 per cent.
The possession ratio implied a transaction value of A$four.25 per Oil Search share, primarily based on Santos’ closing value on 24 June 2021. This represented a 12.three per cent premium to the Oil Search closing value on 24 June 2021 of A$three.78 and a 9.eight per cent premium to the Mubadala block commerce sale value of A$three.865.
On 9 July 2021 Santos obtained a letter from Oil Search which acknowledged the strengths of the mixed firm and the rationale for the Merger Proposal however famous that the proposal didn’t supply applicable worth for Oil Search shareholders or a foundation on which discussions might be progressed. Santos has subsequently sought to interact the Oil Search board on the transaction rationale and the chance for Oil Search shareholders to take part within the worth created by the merger.
The potential merger of Santos and Oil Search is a logical mixture of two trade leaders to create an unrivalled regional champion of measurement and scale with the next options:
• Pro forma market capitalisation of A$22 billion which positions the merged entity within the top-20 ASX-listed firms and the 20 largest world oil and gasoline firms
• Diversified portfolio of top of the range, long-life belongings throughout Australia and Papua New Guinea
• Robust stability sheet with robust liquidity that may self-fund development choices and an funding grade credit standing
• Larger portfolio of growth belongings and alternatives for optimisation
• Strong ESG credentials offering higher entry to debt and fairness capital
• Opportunity to create worth on day one from substantial mixture synergies and anticipated re-rating in share costs
• Santos has a wonderful monitor file of integration and lately merged Quadrant Energy and the ConocoPhillips WA and NT enterprise unit into its low value working mannequin
• The mixture would create higher alignment in Papua New Guinea supporting the event of key initiatives together with Papua LNG, ship new jobs and assist assist the native financial system.
Santos has put ahead the prospect of a real merger the place the possession of the merged entity relies on relative contribution and worth. Oil Search shareholders proceed to take part within the merged entity and retain the chance to understand a premium for management as a part of the merged entity. The strategic rationale for a merger is obvious and provides superior worth to Oil Search shareholders reasonably than persevering with on a standalone foundation.
Santos continues to imagine that the Merger Proposal represents an especially engaging alternative to ship compelling worth accretion to each Santos and Oil Search shareholders.
Santos, primarily based in Adelaide, is an Australian Energy pioneer since 1954 and is right this moment Australia’s largest home gasoline provider and goals to be a number one Asia-Pacific LNG provider.
Oil Search is the most important oil and gasoline exploration and growth firm included in Papua New Guinea, which operates all of Papua New Guinea’s oilfields. Founded in 1929, it’s now one in every of Papua New Guinea’s largest firms. The firm relies in Port Moresby.
(Source: Santos/Oil Search – Image
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