Australian oil and gas company Santos has turned down Harbour Energy’s $10.9bn final takeover offer, saying the quoted price was too low and not appropriate to its total valuation.
The rejection comes after Harbour revised its initial offer twice, with the latest revision valuing Santos at A$6.86 ($5.21) a share.
The offer price was increased by 4.6% from $4.98 a share quoted in the initial proposal after due diligence and negotiations between the companies.
Since the initial offer was made, oil prices and the revised valuation of the Australian energy firm have increased significantly.
Santos noted that the takeover bid was rejected as the deal required the company to hedge a significant proportion of oil-linked production and provide support for Harbour’s debt raising.
In a statement, Santos said: “After careful consideration of all aspects of the final proposal, the Santos independent directors, managing director and CEO have unanimously resolved to reject the final proposal on the basis that it does not represent a full value of the company and, when combined with the associated risks, is not in the best interests of Santos shareholders.”
The company believes that it is better to proceed with its debt reduction strategy as it expects to achieve its 2019 net debt target of $2bn, ahead of schedule.
Other factors that influenced Santos’ decision include its improvement in operating performance over the past two years and a continuing positive outlook.
Santos chairman Keith Spence said: “Santos has a well-developed strategy, strong leadership and management team and outstanding growth opportunities that the board believes will deliver superior value for its shareholders over time.”
