Ann: Becoming a substantial holder - Harbour, page-21

Hmmm, Street talk on afr reckons Harbour wont increase bid

Harbour Energy closes in on Santos, $13.7b bid ready
SARAH THOMPSON MAY 16, 2018
As Santos CEO Kevin Gallagher fronted the gas industry on Tuesday, his company's suitor was closing in on its target.
Harbour Energy is believed to be one step away from claiming Santos Ltd.

After six weeks in the Santos dataroom, Harbour Energy is finally in a position to make a formal offer.

Street Talk understands that a frantic Tuesday saw the global oil and gas player secure its giant funding package and, most importantly, the support of Santos' biggest shareholder and Harbour's now co-conspirator.

Those two milestones should clear the way for Harbour Energy to stump up its bid. As far as its camp is concerned, it is believed to be just a matter of documentation.

Sources said Harbour Energy was not likely to bid against itself for a fourth time, and was very happy with its most recent offer at $US4.98 (worth $6.50 last month and now at $6.60) a share, which values Santos' equity at $13.7 billion.

Remember its opening indicative bid was $4.55 a share last August before returning at $6.25 (March 22) and $6.37 (March 27), before landing at $6.50.

While Harbour had not put forward a binding bid as at Tuesday night, it was expected imminently.

It is understood engagement between the bidder and Santos, and the pair's respective advisers, also stepped up a couple of notches on Tuesday.

While there is nothing on paper, the alarm bells were definitely ringing in the Santos camp late on Tuesday.

Santos, quite rightly, is waiting for a binding bid to land before doing anything.

Once they get an offer, they can consider it and push for a bump, if that is what chairman Keith Spence and his team decide appropriate. There has been noise to such a move over the past fortnight.

It will be interesting to see where the discussions land.

Harbour Energy would argue it has bid against itself four times already, while Santos has and could again point to recent moves in the oil price - both spot and market forecasts - to push for more.

The fact that Harbour is a long way down the path of winning Santos' biggest two shareholders - ENN and Hony Capital, which together speak for 15.1 per cent of the company's shares - is expected to be significant.

Santos shares closed at $6.23 on Tuesday.

Santos was keeping advisers Rothschild & Co, JB North & Co, Deutsche Bank and Herbert Smith Freehills close on Tuesday night.

So too Harbour's Linda Cook and her team, which is advised by JPMorgan, Highbury Partnership, Morgan Stanley and Gilbert + Tobin.

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