Scepter makes $5bn swoop on Santos

Australia’s Santos has rebuffed a A$7.14bn ($5.15bn) takeover bid from Middle Eastern private equity group Scepter

Santos, which needs to reduce its hefty debt by A$3.2bn to maintain its investment-grade credit rating, rejected the bid on the grounds that it was opportunistic and undervalues its assets. The current offer marks a 26% premium to Santos’ closing price of A$5.44 on 21 October and a 40% premium to the past 40 days. But analysts expect the deal, which values Santos at A$6.88/share, will be sweetened by 10% to around A$7.50/share, which would “be sufficient to get a deal done” and values the company on a long term oil price of close to $80/barrel, reported investment house Bernstein. The alternatives for Santos to pay down its debt are less attractive. Either a dilutive equity raise or selling