Offshore bid for Santos Shares soar as Asia-Middle East royal family syndicate makes $7.1b takeover offer

SANTOS shares have soared after the oil and gas producer revealed it was being stalked by a cashed-up syndicate backed by royal families in Asia and the Middle East.

Shares in the group surged more than 20 per cent during trading yesterday after it announced it had knocked back a $7.1 billion takeover bid from the exotically named Scepter Partners.

Scepter

is

a

$14

billion private investment vehicle backed by members of the Brunei and the United Arab Emirates royal families and their region’s sovereign wealth funds.

The syndicate has offered to buy Santos outright for $6.88 a share – a 26 per cent premium on Wednesday’s closing price.

It has also hired former Santos chief John Ellice-Flint to lead the energy producer should its bid succeed.

“Our vision is to build Santos into an Asian oil and gas leader, based in South Australia, harnessing the skills and experience of the Santos workforce,” a Scepter statement said.

Santos yesterday rejected the bid, saying it did not reflect the real value of the company.

“The proposal is considered to be opportunistic in nature and does not reflect the fair underlying asset value of the company,” directors said.

But the company left the door open to a sweetened offer saying it would “continue to consider all proposals which deliver appropriate value and certainty for shareholders”.

Santos shares had more than halved over the past year as investors fretted about a $9 billion debt pile racked up on its Gladstone Liquefied Natural Gas project and an ongoing slump in energy prices.

In August, it launched an all-options strategic review putting merger and acquisitions, asset sales or equity raisings on the table.

Battered energy stocks are fuelling an uptick in deal making, with Papua New Guineafocused Oil Search last month knocking back an $11.6 billion takeover bid from Woodside Petroleum.

Scepter is based in Bermuda and has offices in New York, Hong Kong and Beijing. Brunei prince, Fijian-born Rayo Withanage is chief executive.

Directors include Sheikh Juma al Maktoum – uncle of the Crown Prince of the ruling Dubai family – and former HSBC chairman and Xstrata director John Bond.

Analysts view the Scepter offer as underpriced, with IG market strategist Evan Lucas saying Santos would be hoping for an offer at $10 a share. He said while Scepter’s offer was “completely short”, it was welltimed in that it had caught the Santos leadership on the hop.

Chief executive David Knox is retiring next August, while chairman Peter Coates has been in the role for less than six months.

“They have a dormant CEO, they have a very fresh chairman – their ability to react is against them and the price of oil is against them,” he said.

Santos shares ended the day 16 per cent higher at $6.32.