Oil and gas giant Harbour Energy has announced an unsolicited all-cash offer to buy 100 per cent of Australian-owned Santos for $6.50/share, representing $13.5 billion in total. The offer from Harbour — the second it has made to Santos in recent months — represents a 29 per cent premium on Santos’ last closing price of $5.07 on March 29 .
The offer price is to be split between two components: a cash offer of $US4.70/share ($6.13) and a fully franked special dividend of $US0.28/share ($0.37).
Harbour will primarily fund the transaction through $US7.75bn of debt from J.P. Morgan and Morgan Stanley, with the rest provided by Harbour equity, managed funds and a contribution from Mercuria Energy Group, an energy commodity trading company.
The deal has not been finalised and is still subject to a number of conditions, including completion of due diligence, regulatory approvals and the allocation of 15–20 per cent of outstanding Santo shares to be used for the formation of a special purpose company called Harbour RollCo.
Harbour chief executive officer Linda Z. Cook said the board was standing ready to move forward and that she looked forward to progressing the transaction towards completion.
“Santos has a leading natural gas business in Australian and interests in three operating LNG projects — two in Australia and one in Papua New Guinea — along with an established operating capability and a proven, experienced management team,” she said. “All these components are valuable assets and important to the execution of our vision and strategy.”
Santos has advised its shareholders to take no action in response to the offer.