On Oct. 20, Santos Ltd. received a nonbinding proposal from Scepter Partners, on behalf of the managed funds of its core stakeholders, to acquire all of Santos for a cash consideration of A$6.88 per share. The Santos board has decided to reject the proposal.
The proposal is considered to be opportunistic in nature and does not reflect the fair underlying asset value of the company. The proposal was also subject to numerous conditions, some of which would be adverse to Santos’ continued evaluation of other alternatives in its current strategic review process. Santos said on Aug. 21 that it would conduct a strategic review of all options to restore and maximize shareholder value. The strategic review is ongoing, and will continue to consider all proposals which deliver appropriate value and certainty for shareholders.
According to Reuters, Santos revealed plans to raise A$3.5 billion ($2.5 billion) from a share sale in which Hony Capital will become Santos's top shareholder with a 7.9% stake. The sales will increase Santos’ issued capital by 70%. Reuters also noted that Santos will sell A$3 billion in new stock to existing shareholders at A$3.85 a share; Hony will receive a share placement at a premium and will then exercise the rights to existing shareholders for a total investment of A$700 million at a blended value of A$5.71 a share. Hony has agreed to hold its stake below 10% for at least three months.
Additionally, to pay down debt, Reuters said that Santos plans to divest its stake in the Kipper gas field to Japan's Mitsui & Co Ltd. for A$520 million.
In other company news, Santos has appointed Kevin Gallagher as managing director and CEO, replacing CEO David Knox.