Oil Search accepts Santos merger offer to create top 20 oil company

Oil Search accepts Santos merger offer to create top 20 oil company

Sydney-based Oil Search has accepted a revised A$21bn (US$15.4bn) merger offer from fellow Australian company Santos that would create one of the 20 biggest oil and gas companies in the world.

Under the sweetened Santos offer, Oil Search shareholders would own 38.5 per cent of a combined company with a portfolio of oil and gas assets spanning Australia, the Pacific and the US.

The new offer, which was disclosed on Monday, represented a 6.5 per cent premium on Santos’s original merger proposal on June 25, which was rejected by Oil Search’s board last month.

Oil Search told investors there was strategic logic to the merger, which would create a regional energy champion in the Pacific. The company’s board said it planned to unanimously recommend the offer in the absence of a superior proposal.

Oil Search shares surged more than 5 per cent to A$4.01 on the Australian Securities Exchange.

Analysts said Oil Search’s rapid U-turn on the merger proposal reflected the company’s weakened position following recent management turmoil and concerns about its expansion in Alaska.

“Oil Search’s board has raised the white flag, having been weakened in the wake of management churn and governance concerns, and pressured into a merger by increasingly frustrated investors,” said Saul Kavonic, an analyst at