Aus­tralia’s San­tos gets $10.4b from US fund

Viet Nam News - - MARKETS -

SYDNEY — US in­vest­ment fund Har­bour En­ergy for­malised its US$10.36 bil­lion bid for Aus­tralia’s San­tos Ltd yes­ter­day but failed to sweeten its of­fer, dash­ing hopes of a higher price and send­ing the oil and gas pro­ducer’s shares lower.

A suc­cess­ful bid would mark the big­gest takeover of an Aus­tralian oil and gas pro­ducer, but Ade­laide-based San­tos has in­di­cated the com­pany may be worth more be­cause of re­cent gains in the oil price.

San­tos shares dipped 2 per cent to sit be­low the of­fer price, with an­a­lysts sug­gest­ing the com­pany may re­ject the bid as too low. The broader mar­ket was down 0.3 per cent.

“With only two weeks since the AGM where the (San­tos) Chair­man im­plied this of­fer was not suf­fi­cient, we would an­tic­i­pate the board rec­om­mend­ing re­jec­tion,” Mac­quarie an­a­lysts said in a client note.

San­tos said it would con­sider the of­fer, which had the same US dol­lar value as a pre­vi­ous in­dica­tive bid from Har­bour, and urged share­hold­ers to take no ac­tion.

Har­bour de­clined to com­ment.

The bid would give Har­bour ac­cess to a re­cently re­vived com­pany with a low cost of oil pro­duc­tion and stakes in liq­ue­fied nat­u­ral gas (LNG) in the Asia-Pa­cific, where de­mand is soar­ing.

While Har­bour did not change the value of its for­mal of­fer, San­tos said it had now spec­i­fied it would pay cash to share­hold­ers other than China’s ENN Eco­log­i­cal Hold­ings and Hony Cap­i­tal, which to­gether own 15.1 per cent of the com­pany.

ENN and Hony would be able to roll their ex­ist­ing San­tos shares into a new Har­bour in­vest­ment ve­hi­cle and get shares in that new en­tity, San­tos said.

The ini­tial Har­bour of­fer was val­ued at about A$6.50, based on the foreign ex­change at the time, but oil prices have risen about 17 per cent since then, lead­ing some an­a­lysts to say Har­bour would need to raise its of­fer to A$7.00 a share to suc­ceed. San­tos shares were trad­ing at A$6.20 yes­ter­day.

San­tos opened its books to Har­bour in April af­ter the pri­vate eq­uity-backed firm re­turned with its fourth proposed of­fer since Au­gust. — REUTERS

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