Santos Board believes superior shareholder value could be realised by executing existing strategy:
- The significant improvement in operating performance over the past two years and a continuing positive outlook
- Santos expecting to reach its 2019 net debt target of $2 billion more than a year ahead of schedule, based on current oil prices
- Santos’ strong balance sheet enabling restoration of fully-franked dividends in the near term
- The superior value for shareholders that the Santos Board believes could be realised through the execution of Santos’ existing strategy, capitalising on its strong free cash flows, sustainable low cost operating model and significant growth opportunities
- Feedback from shareholders indicating support for Santos’ existing strategy and management.
Offer price too low; control premium inadequate:
- The reduction in the implied premium for Santos shareholders since the indicative proposal, in light of the strengthening oil price and ASX-listed energy peer group performance
- Harbour’s confirmation that the final offer was “best and final”
- A US dollar-based bid with foreign exchange risk for more than 120,000 retail shareholders.
Private equity transaction structure complex, high risk, uncertain and unequal treatment of shareholders:
- The complexity and risk in the transaction structure, including its reliance on a high level of debt funding
- Prior to shareholders having the opportunity to consider the Final Proposal, Santos being required to assist Harbour’s debt raising and to undertake significant hedging, removing potential upside to higher oil prices
- Unequal treatment of shareholders – Santos’ largest shareholders being offered an opportunity that was not available to all shareholders to remain invested in Santos
- Uncertainty for shareholders due to a protracted execution timetable, which exposed the business to a high degree of risk and would have constrained the execution of Santos’ existing strategy.
“Santos has a well-developed strategy, strong leadership and management team and outstanding growth opportunities that the Board believes will deliver superior value for its shareholders over time,” said Santos Chairman Keith Spence.