Australian Santos Rejects Takeover Bid
Australia’s second largest independent oil and gas producer Santos in August rejected an indicative takeover proposal from energy investment company Harbour Energy, Santos said November 16.
Responding to media speculation that it was the target of a takeover bid, Santos said that the proposal made earlier in the year was for all the shares in Santos at an indicative price of A$4.55 per share.
“The Board rejected the approach on the basis that the indicative price was inadequate and the sources of funds were uncertain,” Santos said.
Santos’ shares were trading at around A$3.35/share at the time of the proposal, RBC Capital Markets analyst Ben Wilson said.
The company also confirmed that it is not currently engaged in discussions with, and has not received a current proposal from, Harbour Energy regarding a change of control transaction for Santos.
The Australian Financial Review on November 16, without naming sources, said Harbour is planning to firm up the proposal with a circa A$5.30/share offer within weeks.
Harbour is externally managed by EIG Global Energy Partners and pursues control and near control of investments in high-quality upstream and midstream energy assets globally.
“Strategic interest in Santos is not a new phenomenon, outgoing Chairman Coates and then then board having rejected an all cash bid at A$6.88/shr from Brunei and UAE backed Scepter Partners with seemingly limited engagement with the bidder,” Wilson said.
“We note that comparisons between the mooted pricing of the Harbour Energy bid and the two-year old rejected Scepter Partners bid are largely moot given in the past two years Santos has subsequently doubled its shares on issue (at prices of A$3.85 and A$4.06), divested assets, improved its capital structure, reduced its costs and we have seen a significant shift in sentiment and pricing of oil, LNG and domestic gas,” he said.
Santos’ assets include the Gladstone LNG terminal in Queensland, as well as those in Papua New Guinea and acreage in the Cooper Basin and Northern and Western Australia.
Nathan Richardson