Santos Limited

Revised Proposal for the Acquisition: Santos Limited’s (ASX: STO) stock was down by 1.899 per cent on May 17, 2018 while a revised conditional proposal from US Private firm, Harbour Energy Australia Pty Ltd to acquire 100% of Santos shares for US$4.98 per share, surfaced. The transaction is subject to certain conditions, including completion of final confirmatory due diligence and entry into a scheme implementation deed between Santos and Harbour. Further, Management stated that its independent directors would consider the revised proposal and advised shareholders to take no action at this time. The main objective of this deal is to help Harbour use Santos core assets to expand its footprint in Australia and Asia regions. However, the Board and management stay concentrated on continuing to deliver shareholder value through the transformation of Santos into a low cost, reliable and high-performance business with strong growth potential.

Despite the news, the stock moved lower as the market was expecting the offer to be better while STO has leveraged from recent oil price scenario. Further, the revised offer does not reflect any change in price and rather puts forth some changes in transaction structure.


Financial Performance (Source: Company Reports)

On the other hand, Ms. Yasmin Anita Allen, Mr. Eugene Shi, and Dr. Vanessa Ann Guthrie are to be elected to the Board as directors. Further, BlackRock Group and subsidiaries became a substantial holder of Santos Limited in May 2018 by holding 104,525,371 securities with 5.01 per cent of the voting power. Moreover, the Company disclosed to ASX that one of its director Kevin Thomas Gallagher had direct and indirect interest in the Company and acquired 520,183 shares via allocation resulting from Long-Term Incentive Grant approved by shareholders at the AGM held on 3 May 2018.  The stock price climbed up by 75.07 per cent in last one year and the stock is currently trading near its 52-week high. Hence, we maintain our “Hold” recommendation at the current market price of $ 6.200.

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