ASX 200 rises, Santos and Oil Search merge

Santos and Oil Search merging was a highlight within the ASX 200.

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The S&P/ASX 200 Index (ASX: XJO) rose by 0.5% today to 7,407 points.

Here are some of the highlights from the ASX:

Santos Ltd (ASX: STO) and Oil Search Ltd (ASX: OSH)

The two oil businesses have agreed to combine to create a “regional champion of scale with a diversified portfolio of long-life and low-cost oil and gas assets.” They have entered into a definitive agreement to merge.

Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held.

Santos expects the merger will unlock pre-tax synergies of between US$90 million to US$115 million per annum (excluding integration and other one-off costs), which is expected to benefit both sets of shareholders.

This combined ASX 200 business will be led by the Santos managing director and CEO Kevin Gallagher, who said:

Santos and Oil Search will be stronger together and will have increased scale and capacity to drive a combined disciplined, low-cost operating model and unrivalled growth opportunities over the next decade.

The merger will create a company with a balance sheet and strong cashflows necessary to successfully navigate the transition to a lower carbon future with the combination of Santos’ leading CCS capability combining with Oil Search’s ESG programs in PNG and Alaska to provide a strong foundation.

Upon completion of the merger, Oil Search shareholders will own approximately 38.5% of the merged company and Santos shareholders will own approximately 61.5%.

AMA Group Ltd (ASX: AMA)

AMA announced today that it has launched a $150 million capital rising. That was split between a $100 million fully underwritten accelerated 1 for 2.80 pro rata non-renounceable entitlement offer and a $50 million fully underwritten senior unsecured convertible notes due in 2027.

The business decided to do this after its capital restructure review.

This raised capital is expected to lead to a number of benefits.

There will be enhanced balance sheet flexibility and funding diversification. AMA will also have a longer duration of debt, with average maturity increased to April 2025. AMA said this raising would give it enhanced liquidity to navigate short-term disruptions associated with COVID-19.

It also said that the raising would give a platform for the business to execute on its own growth strategy.

AMA Group CEO Carl Bizon said:

This capital raising will provide us with funding and flexibility as we face the headwinds presented by COVID-19 and give us the firepower to execute our strategy. AMA Group is uniquely positioned to respond as restrictions lift, and I look forward to us realising the value inherent in the group.

Iress Ltd (ASX: IRE)

The Iress share price fell 3.5% after giving the market an update about its ongoing discussions with EQT. Investors may remember that the ASX 200 fintech received a confidential, non-binding and indicative proposal from funds represented by EQT Fund Management.

At the time of the offer, the two parties agreed to a period of 30 days exclusive access to undertake its due diligence.

Discussions with EQT are progressing and Iress has agreed to grant an additional 10 days of exclusivity to EQT on the same terms.

The Iress board said it will update shareholders and the markets in due course.

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