Big Oil Search investors baulk at $21b merger
- Reading The Australian Financial Review
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.
