OIL Search will be open to a merger proposal that is in favour of their shareholders, according to the petroleum company.
Oil Search said this in a market release following a statement by Santos Ltd disclosing details of its non-binding indicative change of control proposal.
Oil Search said it was always open to receiving and engaging on any proposal that was in the best interest of shareholders.
“Oil Search agrees with Santos that there is strategic logic in a combination of the two companies,” the company said.
However, it said the terms of any such combination needed to be fair for Oil Search shareholders and those in Santos’ original proposal were demonstrably not.
Oil Search noted that based on July 16 closing share prices for Oil Search and Santos, the proposed terms represented a premium of only 6.8 per cent despite Santos shareholders owning 70 per cent more of the equity than Oil Search shareholders.
Oil Search communicated to Santos that it is open to receiving a revised proposal which more appropriately reflected the value which Oil Search would bring to any combined entity.
“At this stage, no such proposal has been forthcoming.”
Meanwhile, Santos, in a statement on Tuesday, said the company, on June 25, submitted a confidential, non-binding indicative all-scrip merger proposal to the Oil Search board.
“Following approval of the scheme, Oil Search shareholders would own 37 per cent of the merged group and Santos shareholders would own 63 per cent,” it said.
“On July 9, Santos received a letter from Oil Search which acknowledged the strengths of the combined company and the rationale for the merger proposal, but noted that the proposal did not offer appropriate value for Oil Search shareholders or a basis on which discussions could be progressed.
“Santos has subsequently sought to engage the Oil Search board on the transaction rationale and the opportunity for Oil Search shareholders to participate in the value created by the merger.”
The National / Pacific Mining Watch
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