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Santos rejects US takeover offer

Business

Shares in Adelaide-headquartered energy giant Santos have soared to a 15 month high after it confirmed it recently rejected a takeover offer from a major US investor worth almost $9.5 billion.

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Santos said the indicative proposal from Harbour Energy in August was inadequate and the sources of funds were uncertain.

Fairfax Media is reporting that a consortium of investors, led by Harbour Energy, is planning an all-cash bid worth $11 billion that could be put to the Santos board within weeks.

“On 14 August 2017 Santos received a confidential, non-binding conditional and indicative proposal from Harbour Energy to acquire all the shares in Santos by way of a scheme of
arrangement,” the company said in a statement to the ASX.

“The indicative price was AUD$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.”

Shares in Santos were halted from trade in the first 90 minutes of Thursday’s session, and soared once the halt was lifted.

They were up 54 cents, or 12.3 per cent, at $4.92 at 1230 AEDT, their highest level since mid-August 2016.

The Australian Financial Review reported today that a consortium of global energy investors, led by a former executive director of Royal Dutch Shell, had recently approached the board with a takeover scheme.

While that approach was rejected, the newspaper reports that a “much less incomplete and uncertain proposal is in the making”.

Harbour Energy is an investment vehicle formed by American private equity firm EIG Global Energy Partners, specialising in investing in energy and energy-related infrastructure.

Santos has five key natural gas assets, in Papua New Guinea, Queensland, Darwin, Western Australia’s Carnarvon Basin and central Australia’s Cooper Basin.

It made a loss of $US1.1 billion in 2016, as it began work on streamlining its business to focus on those five gas assets, including the divestment of other assets to reduce its debt.

– with AAP

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