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Australia's Santos gets $10.4 billion bid from Harbour; investors may want more

Reuters  |  SYDNEY 

By and Paul

SYDNEY (Reuters) - U.S. investment fund formalised its $10.36 billion bid for Australia's Ltd on Thursday but failed to sweeten its offer, dashing hopes of a higher price and sending the oil and gas producer's shares lower.

A successful bid would mark the biggest takeover of an Australian oil and gas producer, but Adelaide-based has indicated the company may be worth more because of recent gains in the

shares dipped 2 percent to sit below the offer price, with analysts suggesting the company may reject the bid as too low. The broader market was down 0.3 percent.

"With only two weeks since the AGM where the (Santos) implied this offer was not sufficient, we would anticipate the board recommending to reject," Macquarie analysts said in a client note.

Santos said it would consider the offer, which had the same U.S. dollar value as a previous indicative bid from Harbour, and urged shareholders to take no action.

Harbour declined to comment.

The bid would give Harbour access to a recently revived company with a low cost of and stakes in liquefied (LNG) in the Asia-Pacific, where demand is soaring.

did not change the value of its formal offer, Santos said it had now specified it would pay cash to shareholders other than China's and Hony Capital, which together own 15.1 percent of the company.

ENN and Hony would be able to roll their existing Santos shares into a new Harbour investment vehicle and get shares in that new entity, Santos said.

The initial Harbour offer was valued at about A$6.50, based on the foreign exchange at the time, but have risen about 17 percent since then, leading some analysts to say Harbour would need to raise its offer to A$7.00 a share to succeed. Santos shares were trading at A$6.20 on Thursday.

Santos opened its books to Harbour in April after the private equity-backed firm returned with its fourth proposed offer since August.

(Reporting by in SYDNEY, Paul in MELBOURNE and Ambar Warrick and Chris Thomas in BENGALURU; editing by Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 09:43 IST