A US private equity group just lobbed a massive $13.5 billion cash takeover bid for Santos

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Harbour Energy Ltd, a US-based private equity group, has made a $A13.53 billion cash offer for Australian oil and gas giant Santos.

The offer price is $US4.98 a share, or about $A6.50, a premium of 28% on the last trading price of $5.07. In early trade today, Santos shares were up 21% to $6.15

The latest bid follows a previous offer by Harbour of $A4.55 a share in August last year. It has since upped its offer to $A6.25 and then $A6.37.

A Santos Board committee has been formed to consider the approach from Harbour. The two companies have signed a confidentiality agreement to allow Harbour to undertake due diligence.

Harbour Energy says it would utilise Santos’s core assets and capabilities as a platform for growth in Australia, throughout Asia, and the global LNG sector.

Harbour says it expects to invest further in Santos’ existing assets and to pursue the acquisition of additional natural gas and LNG-focused assets in Australia and internationally.

“Santos has a leading natural gas business in Australia and interests in three operating LNG projects — two in Australia and one in Papua New Guinea — along with an established operating capability and a proven, experienced management team,” says chief executive officer of Harbour Energy, Linda Z. Cook.

“All of these components are valuable assets and important to the execution of our vision and strategy.”

Santos in February posted a 21% rise in full year revenue of $3.17 billion. Underlying profit was $336 million, up from $63 million the year before.

Harbour’s proposal is funded with committed debt and equity capital from leading global financial institutions and institutional investors.

Included within this group is a material equity contribution from Mercuria Energy Group, one of the world’s largest integrated energy and commodity trading companies.

J.P. Morgan and Morgan Stanley have provided an underwritten debt financing package of $US7.75 billion.

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