Santos’ Oil Search premium raises eyebrows

The deal’s revised terms may require a greater focus on cost efficiency

Papua New Guinea (PNG)-focused Oil Search announced in early August that it had agreed to a revised merger offer from Australian independent Santos after rejecting a previous offer made in late June. Under the terms of the proposal, which would create Australia’s largest oil and gas company, Oil Search investors will receive 0.6275 new Santos shares for each Oil Search share. This would imply a transaction price of A$4.29 per Oil Search share, based on the companies’ 19 July closing prices, and give Oil Search a 38.5pc stake in the merged unit. A$4.29 – Revised offer per Oil Search share The new offer represents a 16.8pc premium to Oil Search’s 19 June closing price, up from t

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