Oil Search rejects Santos' merger proposal
Oil Search (OSH) on July 20 said it had rejected a merger proposal from fellow Australian oil and gas explorer Santos.
The company said it had recently received the confidential non-binding and indicative merger proposal, which was assessed by the board, the senior management, and its advisors. “Following that assessment, the proposal was rejected as it was determined to not be in OSH shareholders' best interests on the terms and value proposed,” the company added.
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Santos in a separate statement confirmed it had on June 25 submitted a non-binding all-scrip merger proposal.
According to the proposal, Oil Search shareholders would have received 0.589 new Santos shares for each Oil Search share held. Following approval of the deal, Oil Search shareholders would own 37% of the merged group and Santos’ shareholders would own 63%.
The ownership ratio implied a transaction price of A$4.25 ($3.11)/Oil Search share, based on Santos’ closing price on June 24, Santos said. This represented a 12.3% premium to the Oil Search closing price of A$3.78 and a 9.8% premium to the Mubadala block trade sale price of A$3.865. UAE's state-owned Mubadala Investment Company is Oil Search's largest shareholder.
Santos said it has 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.
“The combination would create greater alignment in Papua New Guinea supporting the development of key projects including Papua LNG, deliver new jobs and help support the local economy,” Santos said.
Oil Search announced on July 19 that its managing director Keiran Wulff has resigned due to health reasons.