Leading Australian oil and gas company Santos has revealed that it has received an unsolicited take-over offer from US-headquartered Harbour Energy Ltd.
Harbour Energy, an energy investment vehicle formed by EIG Global Energy Partners, has proposed a non-binding, indicative and conditional offer to acquire 100% of Santos shares by way of a scheme of arrangement.
The indicative offer price is US$4.98 per share, which in Australian dollars, is equivalent to A$6.50 per share and represents a premium of:
+ 28% to the last closing price of Santos of A$5.07 per share on 29 March 2018; and
+ 30% t to the one month volume weighted average share price of Santos of A$5.00 per share up to 29 March 2018.
The indicative offer price is comprised of the following components:
+ A cash offer price of US$4.70 per share (equivalent to A$6.131 per share); plus
+ A special dividend of US$0.28 per share (equivalent to A$0.371 per share) which is expected to be fully franked.
Harbour has indicated that funding for the transaction is to be provided in the form of US$7.75 billion of debt that is to be underwritten by J.P. Morgan and Morgan Stanley (who have each provided commitment letters) and the balance in equity from Harbour, other EIG managed funds and Mercuria Global Energy (who have each provided equity commitment letters for their respective amounts).
The Harbour Proposal follows three prior unsolicited proposals from Harbour, being: (i) 14 August 2017 (indicative offer price: A$4.55 per share); (ii) 22 March 2018 (indicative offer price: A$6.25 per share); and (iii) 27 March 2018 (indicative offer price: A$6.37 per share).
A Santos Board committee comprising the chairman, the managing director and the Chair of each of the Board standing committees has been formed to consider the approach from Harbour and to make recommendations to the Santos Board.
The Santos Board considers that, based on the indicative offer price of A$6.50 per share, it is in the interests of shareholders to engage further with Harbour.