Santos and Oil Search have finalised their $21 billion merger after announcements to the ASX on Friday.
After conducting several weeks of due diligence, the two companies confirmed the terms of the all-shares deal under which Oil Search investors would receive 0.6275 new Santos shares for each of their shares.
The two companies sought an extension of the due diligence period earlier this week, but it seems not to have been needed.
It will now be up to the shareholders in both companies and the PNG government to determine if the deal will head towards completion.
The Papua New Guinea government in fact holds the whip hand because both Oil Search and Santos are partners in the Exxon-led PNG LNG project, as well some expansion areas.
If it happens, Oil Search shareholders would own about 38.5% of the merged entity and Santos shareholders would own 61.5%.
“Put simply, this merger provides Oil Search shareholders with a compelling opportunity to participate in a larger entity with significant scale, product mix, ESG and geographic diversity, and access to capital,” Oil Search Chairman Rick Lee said in Friday’s statement.
The merger was proposed in mid-July, then recast in early August to improve the terms for Oil Search shareholders.
The merged company recons they can get pre-tax savings of $US90-$US115 million a year – which will mean that staff at the smaller Oil Search face the majority of the cost cuts.
