AFR update

Santos puts pressure back on would-be suitor
Nov 16 2017 at 12:36 PM

Santos has moved swiftly to put the ball firmly back in the court of its would-be US acquirer.
On Thursday morning the Adelaide-based group confirmed the report from The Australian Financial Review's gun columnist Matthew Stevens, that Harbour Energy, led by former Shell executive Linda Cook, had made an offer for the company in August.
The exact date, we now know, was August 14. The price was $4.55, which at the time represented a whopping premium of almost 36 per cent to Santos' share price of $3.35.
Santos said on Thursday that it "rejected the approach on the basis that the indicative price was inadequate and the sources of funds were uncertain".
It also pointed out it "receives a range of proposals from time to time and is at all times in compliance with its continuous disclosure obligations".
The Santos stance seems fair enough. Even at that original offer price, the Harbour bid was worth more than $10 billion, so doubts around financing would have been completely reasonable.
By confirming that it is not in current discussions with Harbour, Santos is effectively saying that Cook needs to put her new offer – which is expected to be around $5.30 a share – on the table, and show she has the funding to back it.
Unlike in other such takeover tussles, time has been kind to Santos.
A rising oil price – up 22 per cent since August 14 – and more evidence that chief executive Kevin Gallagher's clean up is working has seen the share price rise to $4.38, a gain of 30 per cent since Harbour's first offer.
The question for Santos now is whether it could still get a 36 per cent premium out of Harbour. And will that be enough to get the board and investors over the line.

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