Latest Takeover offer might be rejected - News Story

An extract from the Melbourne Herald Sun - posted by Terry McCrann who is a well respected Business journalist:
He has an interesting view and believes the STO board wont accept the latest offer.... lest see what eventuates !!


"As I argued when Harbour surfaced two months ago with a potential bid for Santos, it was precisely the sort of foreign investor we should want; and specifically so in oil and gas. It was aimed at being a serious, value-creating long-term oil and gas investor and business.
It would provide an impressive and meaningful alternative to ‘big gas’ — those existing players that dominate our gas industry and have created huge (and expensive to consumers) problems of domestic supply.

Unlike the Shell bid to buy our biggest stand-alone oil and gas company Woodside in the early 2000s — which was banned by then treasurer Peter Costello — there would be no risk of Harbour ‘cellaring’ Santos’s oil and gas. After spending perhaps $15 billion to buy Santos, Harbour will want to maximise and grow output.

The question then will be left to the board of Santos and shareholders. It becomes a question of price and terms.
Harbour has increased its offer from April’s opening $US4.98 ($6.50) a Santos share to $US5.21 ($6.95). But with three very significant changes.

In the opening bid, Harbour proposed to give accepting shareholders a guaranteed Australian dollar price for at least some of their holdings.
It also proposed to allow them to reinvest in the — unlisted — vehicle buying Santos. Both of those have now been dropped.
Shareholders will have to punt on the $A-$US exchange rate over the months it will take to get their money. They don’t get to punt on the ‘future Santos’.

This rather marginal increase in the offer price — despite the surge in the price of oil (and gas) — will only be delivered if Santos agrees to major price hedging of its future oil and gas sales.
Harbour says the offer is its ‘best and final’. Frankly, it is an offer that Santos should find impossible to accept.
If Harbour sincerely wants Santos and, sincerely or not, wants it to hedge away much of the future upside if the oil price was to go higher, it has to offer a compelling price. Sure, it can be in US dollars, but it has to be more than $US5.21."