.Harbour lodged its formal offer for Santos on Thursday but today increased the bid – and indicated it could go even higher.
In a statement today, Santos said Harbour had offered US$5.21 per share – an increase on the previous offer of US$4.98 – to take the total bid to A$14.5 billion.
The US private equity firm’s bid is on condition that Santos increases its oil price hedging for the next two years.
The revised proposal also indicated the offer price would be further increased to the equivalent of A$7.00 per share if Santos also agrees to hedge 30 per cent of its oil-linked production in 2020.
“The Revised Harbour Proposal is conditional on Santos undertaking additional hedging of oil-linked production in 2018 of c.30% and changes to hedging in 2019,” Santos said. “In addition, Harbour has indicated the offer price would be increased to a US dollar amount equivalent to A$7.00 per share if Santos agrees to hedge 30% of oil-linked production in 2020.”
Santos said its independent directors “will consider the Revised Harbour Proposal and will update shareholders accordingly”.
“There is no certainty that the Revised Harbour Proposal will result in an offer for Santos that is capable of being considered by shareholders. Santos shareholders are advised to take no action in relation to the Revised Harbour Proposal at this time.”
Harbour said the revised offer had the support of ENN and Hony, “together the largest shareholders of Santos, as well as harbour’s equity and debt financiers”.
“Harbour proposed this increase following discussions with Santos over the weekend in which Harbour indicated a willingness to provide a higher offer price for the shareholders in return for Santos agreeing to implement oil hedging out to 2019, within its existing hedging policy,” Harbour said in a statement.
“This additional hedging is not required to support Harbour’s financing, but rather enables us to reduce transaction costs and increase the offer price.”
We value local independent journalism. We hope you do too.
InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.