Santos and Oil Search have reached an agreement on the merger ratio under the proposed merger and the additional terms set out in the Revised Merger Proposal.
Under the Revised Merger Proposal, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a Scheme of Arrangement. Following approval of the scheme, Oil Search shareholders will own approximately 38.5 percent of the merged group and Santos shareholders will own approximately 61.5 percent.
The board of Oil Search has confirmed that, subject to the completion of confirmatory due diligence and the agreement of a binding Merger Implementation Agreement, their intention is to unanimously recommend the Revised Merger Proposal, in the absence of a superior proposal and subject to an independent expert concluding that the scheme of arrangement is in the best interests of Oil Search shareholders.
The Revised Merger Proposal implies a transaction price of A$4.29 per Oil Search share, based on the closing price of Santos and Oil Search shares on July 19, 2021 (being the day prior to disclosure of the first proposal). This represents a 16.8 percent premium to the Oil Search closing price on July 19 and a 16.4 percent premium to the one-month VWAP on that day. In addition, the proposal represents the opportunity to deliver compelling value accretion to both sets of shareholders.
The combination would also 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. Oil Search shareholders would continue to participate in the merged entity and retain the opportunity to realise a premium for control as part of the merged entity.
Santos managing director and chief executive officer Kevin Gallagher said the potential merger of Santos and Oil Search is consistent with Santos’ disciplined strategy to grow around its core assets.
Santos and Oil Search have committed to conduct best endeavours due diligence subject to appropriate confidentiality arrangements over a period of approximately four weeks with the aim of entering into a Merger Implementation Agreement, which would contain conditions to completion of the merger such as regulatory approvals.
Each party will be free to declare ordinary dividends in accordance with existing dividend policy through to signing of the Merger Implementation Agreement. Should a party declare a dividend outside its existing dividend policy before the signing of the Merger Implementation Agreement, there would be an appropriate adjustment to the merger ratio.
For more information visit www.santos.com
