ENERGY PAIR SIGN $21BN MERGER AGREEMENT $21BN MERGER AGREEMENT
SANTOS and Oil Search have signed a merger agreement, cementing a $21bn deal that will result in the combined business catapulting into the world’s 20 largest energy companies.
Santos will own 61.5 per cent of the merged company to Oil Search’s 38.5 per cent, a boost for Oil Search to the previous 63-37 per cent weighting between the two that was rejected by its board.
Adelaide-based Santos expects the merger to unlock pre-tax synergies of $US90m to $US115m ($122m-$156m) a year, excluding integration and other one-off costs, which it said would benefit both sets of shareholders.
Oil Search confirmed that it intended to recommend shareholders vote in favour
of the proposal, which would create an Australian and Papua New Guinea oil and gas giant. The combined company will be headed by current Santos CEO Kevin Gallagher with three Oil Search directors likely to be included on the joint board.
Santos said the deal would create an energy giant that would be in the top 20 listed ASX companies and also rank among the 20 biggest oil and gas companies in the world.
“The merger represents an attractive combination of two industry leaders to create a regional champion of quality, size and scale with a unique and diversified portfolio of long-life, lowcost oil and gas assets,” Santos chairman Keith Spence said.
The tie-up would have catapulted Santos into Australia’s biggest oil and gas producer, but a $40bn merger between Woodside Petroleum and BHP’s petroleum arm may see the company remain second in the pecking order.
Santos increased its bid to 0.6275 new Santos shares for each Oil Search share held, from 0.589 shares under its original offer.
Santos shares closed up 3c at $6.06 on Friday, and Oil Search added 8c to $3.73.