Santos, Oil Search agree on merge ratio
Santos and Oil Search have reached an agreement on a revised ratio under the proposed merger deal, creating a top 20 oil and gas company, Santos said on August 2. Oil Search had last month rejected the previous proposal from fellow Australian oil and gas explorer.
Under the revised merger proposal, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held. Following approval of the deal, Oil Search shareholders will own approximately 38.5% of the merged group and Santos shareholders will own approximately 61.5%. According to Santos, the board of Oil Search has confirmed they intend to unanimously recommend the revised merger proposal.
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The revised merger proposal implies a transaction price of A$4.29 ($3.15)/Oil Search share, based on Santos and Oil Search's closing price on July 19. This represents a 16.8% premium to the Oil Search closing price.
Santos said the combination would create greater alignment in Papua New Guinea supporting the development of key projects including Papua LNG, deliver new jobs, and help support the local economy.
"It represents a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets,” Santos CEO Kevin Gallagher said.
"The merger also builds on our industry-leading approach to ESG through the combination of Santos' net-zero 2040 pathway, including its sector-leading CCS projects, and Oil Search's unique social programs in PNG, underpinned by a strong balance sheet to fund the transition to a lower carbon future,” he added.