Santos tells Harbour to lift

Santos Chairman Keith Spence.

Santos Chairman Keith Spence.

Santos Chairman Keith Spence has said that Harbour Energy may have to increase its $13.5 billion takeover bid, according to the Australian.

Mr Spence reportedly told shareholders at the company’s annual general meeting yesterday that stronger oil prices have left the Australian producer in stronger bargaining position.

Harbour made a bid for Santos on 3 April, valuing each share at $6.50, but the oil price has risen by 8 per cent since then to US$67.83 (AU$89.78) per bbl.

During the same period, Santos’ share price has jumped 22 per cent and now sits at $6.22 per share.

“Clearly, the impact of oil price increases in recent times must have some impact on the perception of value,” Mr Spence told shareholders.

“In the short term, higher oil prices are generating more cashflow for the business and the business therefore needs to be compensated.”

The offer is still subject to a number of conditions, including:

  • Regulatory approvals, including approval from the Foreign Investment Review Board
  • A minimum of 15 per cent (max. 20 per cent) of existing Santos shares outstanding rolling over into unlisted shares of a special purpose company (Harbour Rollco) that will remain invested in Santos
  • Entry into binding debt financing commitments
  • Completion of confirmatory due diligence.

Rothschild & Co., J.B. North & Co and Deutsche Bank are acting as financial advisors to Santos and Herbert Smith Freehills is acting as legal advisor.


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