This has driven up the value of Harbour’s $US4.98 bid significantly from a $6.50 a share, $13.5 billion, offer to a valuation of $6.67 a share as of Wednesday, adding more than $350 million to its initial offer.
Despite exchange gains, Citi analyst James Byrne expects Harbour will still have to up its offer to $7 a share to account for the recent increases in the Australian dollar oil price.
“Because the market’s expectation of long-term oil prices has increased, the market’s intrinsic value for Santos has theoretically increased and Harbour would need to compensate shareholders,” he said.
He said this was justified as every $US5 increase in the oil price assumes an additional 42 cents on top of Santos’s share price.
Analysts expect that for ever $US5 increase in the oil price, Santos's share increase by around 42 cents.
Photo: Bloomberg
This forecast, at current exchange rates, would see Harbour paying around $14.5 billion for Santos, one billion dollars above its April offer and $1.5 billion above Santos’s current market cap.
Mr Lennox said a slightly higher bid isn’t out of the realms of possibility.
“We’ve valued Santos at a bit over $7, so given the outlook for oil is a little brighter you’d think Harbour would sweeten the deal by 50 cents or so,” he said.
Mr Byrne warned if Harbour doesn’t come back with a higher offer the deal may collapse.
GOOD, LET IT COLLAPSE!!!
BRENT IS AT $79.20 THIS MORNING
When they first made the offer on the 3rd of April brent was $67.50, well now its $79.20.
SO, THE OFFER NEEDS TO BE AROUND $7.50
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Last
$7.02 |
Change
0.180(2.63%) |
Mkt cap ! $23.02B |
Open | High | Low | Value | Volume |
$6.94 | $7.03 | $6.91 | $42.96M | 6.156M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
55 | 58877 | $7.01 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$7.02 | 49067 | 38 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
4 | 129176 | 6.920 |
6 | 233123 | 6.910 |
9 | 295156 | 6.900 |
11 | 303505 | 6.890 |
4 | 129828 | 6.880 |
Price($) | Vol. | No. |
---|---|---|
6.940 | 107742 | 9 |
6.950 | 424616 | 27 |
6.960 | 247191 | 13 |
6.970 | 73167 | 4 |
6.980 | 17507 | 1 |
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