Big Oil Search investors baulk at $21b merger
Big Oil Search investors baulk at $21b merger - Financial Review, 12/1/2021
Angela Macdonald-Smith At least two big institutional investors in Oil Search have resolved to vote their shares…
On December 1, Oil, Search, the Papua New Guinea oil and gas producer, has Santos's $21 billion merger deal with its long-life, high-margin gas assets. Although its investors worry about the value provided to the combined company more than it is getting paid for, they may find the merger beneficial considering the funding challenges on a standalone basis.
Other financial analyses support the merger as a compelling strategic alternative to stabilise, considering the weakened board and its need to grow production profile and avoid a likely equity raising and dividend cut to fund its growth projects in Australia.
The minority shareholders vote against the deal, including two big institutional investors, an investor in Asia with 2% share and Allan Gray with 4% share. They want the merger terms to be improved, especially when questioning the credibility of the company's leadership and the merger without a plan for the change in governance.