Australia's second-and third-largest oil and gas companies will merge into one of the largest oil and gas companies in the region and rank among the top 20 in the world.
Oil Search Ltd. Said on Monday that it agreed to Santos Ltd.'s improved all-share offer, under which shareholders will receive 0.6275 new Santos shares for every share of the company they own, which will give them about 38.5% of the combined company. The combined entity would have a market capitalization of about $16 billion, making it Australia's largest independent LNG producer on a par with Woodside Petroleum Ltd.,.
"it may be close enough to close the deal," John Ayoub, a portfolio manager at Wilson Asset Management International Pty, which owns shares in both companies, said by phone. "some shareholders may want a little more, but from our point of view, we support Oil Search's board agreeing to the deal."
The move could mark the beginning of a wave of mergers and acquisitions in Australia's oil and gas industry, BHP BillitonIt was said to be considering selling fossil fuel assets.