Fresh $13.5b bid sends Santos shares soaring

SANTOS shares have rallied to their highest level in more than two years after a foreign company resurrected its efforts to buy the energy heavyweight with an improved offer.

US private investment house EIG Global Energy Partners, through its investment unit Harbour Energy, has made a $13.5 billion bid for the oil and gas group.

It is offering $6.50 for each Santos share — a premium of almost 30 per cent to the $5.07 closing price for the stock last Thursday. Shares in Santos surged 16.2 per cent after details of the bid were announced yesterday, adding $1.7 billion to its market value.

They ended the session at $5.89 — their highest closing price since November 2015.

In a statement, Santos said the “unsolicited, non-binding, indicative offer and conditional proposal” was received on Thursday.

Harbour has proposed to pay $US4.98 ($6.50) a share, comprised of $US4.70 in cash and a special US28c dividend.

The offer would be funded through $US7.75 billion debt, which is being underwritten by investment banks JP Morgan and Morgan Stanley and other investors.

Santos said the offer followed three previous unsolicited proposals from Harbour including two last month — at $6.25 on March 22 and $6.37 on March 27 — and a $4.55 bid last August.

“The Santos board considers that, based on the indicative offer price of $6.50 per share, it is in the interests of shareholders to engage further with Harbour,” it said.

Harbour has struck a confidentiality agreement with Santos in order to scrutinise its books. Directors have advised shareholders take no action for now.

In November, Santos first revealed EIG Global Energy’s “energy investment vehicle”, Harbour — led by former Shell executive Linda Cook — had made the $4.55-a-share offer, which had been rejected.

Santos director Hock Goh was previously on the Harbour board.

For any takeover offer to proceed, the suitor would have to woo Chinese private equity house Hony Capital and Sino gas distributor ENN Energy.

Those investors have a combined stake in Santos of almost 13 per cent.

Harbour said it was making a provision for Santos’s existing shareholders to remain invested in the group if they desired by electing to accept unlisted equities in the new, private company.