Harbour Energy in fresh tilt for Santos: sources
American oil and gas investor Harbour Energy is understood to have made a fresh approach to Australia's Santos.
American oil and gas investor Harbour Energy is understood to have made a fresh approach to Australia's Santos.
Street Talk understands the two parties have been in talks across the Easter long weekend, after Harbour Energy approached Santos with an all-cash proposal late last week.
Santos shares last closed at $5.07, valuing the company's equity at $10.6 billion.
It's understood Harbour Energy's indicative offer was at a premium to the last close.
Santos is expected to grant the bidder due diligence, but stop short of recommending the offer to shareholders at this early stage. It is expected to announce the approach to the market as early as Tuesday.
The new approach comes as Harbour Energy boss and former Shell executive Linda Cook has been in Australia meeting stakeholders.
It also comes about six months after Harbour Energy last approached Santos, with an indicative offer at $4.55 a share. Santos rebuffed the proposal, saying it undervalued the company and the bidder's funding was uncertain.
Since then, the market has been awaiting Harbour Energy's return.
Harbour Energy has been seeking support from fellow equity and debt backers for a fresh bid. The Australian FInancial Review revealed in November that Harbour Energy was seeking to shore up a $5.30 a share offer, which prompted Santos' disclosure of the earlier proposal.
Santos is advised by Deutsche Bank and Rothschild Australia.
Harbour Energy has been taking its counsel from JPMorgan, Highbury Partnership and Gilbert + Tobin, and is also believed to have drafted in Morgan Stanley. It is owned by resources private equity investor EIG Global Partners, which is best known locally for its stake in ASX-listed Senex Energy.
Santos is about 15 per cent owned by two Chinese shareholders, gas distributor ENN Group and private equity firm Hony Capital, who under a strategic partnership with Santos have the option to counter any takeover offer that is higher than their own entry price onto the share register.
It is not the first time Santos has been in private equity crosshairs. The company rejected a $7.1 billion approach from a separate private equity outfit in October 2015. It has since raised equity twice, tapping new and existing shareholders for a combined $4 billion in fresh funds.