SANTOS has informed the market of a proposal from US private equity business Harbour Energy to acquire 100% of company 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.
Harbour has indicated money for the transaction is to be provided in the form of US$7.75bn of debt 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.
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.
“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,” Santos said in a statement.
“Accordingly, Harbour has entered into a confidentiality agreement with Santos to allow Harbour the opportunity to undertake confirmatory due diligence.
“There is no certainty at this time that the Harbour Proposal will result in an offer for Santos that is capable of being considered by shareholders.
“Directors therefore advise that Santos shareholders take no action in relation to the Harbour Proposal at this time.”