The Oil Search Ltd (ASX: OSH) share price is down amid reports the company's interim CEO wants "more carats in the diamond ring" from Santos Ltd (ASX: STO).
It's the latest broadside in the merger and acquisition saga involving the two oil companies.
Right now, the Oil Search share price is $3.96, 0.63% lower than its previous closing price.
Interim CEO Peter Fredricson reportedly told The Australian the company saw merit in Santos' takeover offer, posed to the company late last month, but rejected it as the payout was too small.
Let's take a closer look.
Quick refresher
Santos submitted a $23 billion confidential takeover offer to Oil Search late last month.
The takeover attempt was made public last week when Oil Search announced it had rejected the proposal.
Santos had offered a $4.25 scrip consideration for each of Oil Search's shares. That represented a 12.3% premium on the Oil Search share price as of 24 June 2021.
If Santos' proposal was accepted, Oil Search would have held 37% of the resulting entity.
Oil Search said Santos' proposal undervalued its shares. The Oil Search share price gained 6.2% after the annoucement it had rejected the offer.
Today's news of Oil Search
The Oil Search share price is off the pace in early trade with Santos' rejected proposal in the headlines again.
The Australian has reported Oil Search is willing to discuss a merger between it and Santos if the latter can offer the right price. Fredricson was quoted as saying:
It's a little bit like someone wants to gets engaged and give you a diamond ring but we gave the diamond ring back and said no thanks. They need to come back with a couple more carats in the diamond ring.
Fredricson also said "the vast majority" of the company's shareholders want to go ahead with the merger, but Oil Search is holding out for a better deal:
An alignment putting Oil Search and Santos together has huge industrial logic to it. But you've got to get an appropriate value allocation because we've got shareholders that aren't shareholders of Santos. And we've got to look after their rights.
Fredricson was given the top job at Oil Search last week after Keiran Wulff stepped down unexpectedly. Fredricson told The Australian he wants to keep the company's biggest office permanently, despite having little experience in gas and oil. He was quoted as saying:
So long as you've got the oil and gas expertise within your team, I see no reason why I couldn't be the long-term CEO of this business.
Oil Search share price snapshot
2021 has been a good year so far for the Oil Search share price.
It is currently 7.55% higher year to date. It has also gained 27% since this time last year.
The company has a market capitalisation of around $8.3 billion, with approximately 2 billion shares outstanding.
