Oil Search has rejected a Santos merger bid valuing the joint entity at $22 billion, revealed one day after Oil Search’s chief executive resigned.
In a statement to markets, Santos said it had received a letter from Oil Search noting the proposal did not offer appropriate value, and that it has subsequently sought to engage on a transaction rationale.
But the company is open to a revised proposal.
With a $22 billion market capitalisation, the new entity would be in the ASX20 and one of the world’s top 20 oil and gas companies, Santos said.
Woodside had also made an acquisition approach to Oil Search in 2015, a deal which was declined.
Santos touted the deal as creating a business with a strong balance sheet and growth opportunities.
“The combination would create greater alignment in Papua New Guinea supporting the development of key projects including Papua LNG, deliver new jobs and help support the local economy,” the company's ASX release said.
Oil Search’s statement said former managing director Kieran Wulff, who resigned yesterday, had not participated in evaluating the transaction.
But the board also noted it had been in discussions with Dr Wulff after recent complaints about his behaviour; and behaved in a standard inconsistent with the expectations of the board in his management style.
He had held the roles since February 2020.