Shares in hydrocarbons giant Santos Ltd (ASX: STO) finished 2.28% in the green at $6.73 on the cusp of the company’s planned merger.
Santos shares were catching bids today as its proposed merger with Oil Search Ltd (ASX: OSH) enters into its final stages. Let’s take a closer look.
What was announced today?
Santos advised it had received the necessary clearance from the Independent Consumer and Competition Commission (ICCC) of Papua New Guinea (PNG) to cement its merger with Oil Search.
The pair were required to satisfy this caveat, which was labelled clause 3.1(e) of the merger implementation deed.
As such, the condition set out in the clause has now been satisfied, as confirmed by both parties in separate announcements today.
The next stage of the deal is to be heard in a PNG court tomorrow, 9 December. A National Court of PNG will hear from both parties in the merger, and how both intend to tackle identifiable risks, amongst other factors.
The merger must still satisfy or waive (where capable) additional customary conditions outlined in the implementation deed.
The confirmation today follows further affirmation by PNG’s Securities Commission yesterday, which also gave its approval for the merger.
This came on the same day that Oil Search shareholders voted with an overwhelming majority for the merger to proceed to form an oil and gas powerhouse in the region.
The vote of approval from Oil Search’s equity holders adds another layer of credibility to the deal. Some expert analysis had felt the company is bringing more value to the table for its roughly 38% share of the newly-formed entity.
However, the same analysis also concluded Oil Search would benefit more from completing the merger than if it remained a standalone entity.
More details are sure to come following the court hearing tomorrow where, if successful, the effective implementation date will be on 17 December. After that, the new Santos shares will begin trading on 20 December on an ordinary settlement basis.
Santos shares are up marginally in the past 12 months having gained just over 4.5% in that time. Year to date, the Santos share price has climbed more than 7% but is down almost 1.5% in the last month.