The National Court of Papua New Guinea has directed that Oil Search Ltd. convene a meeting of its shareholders to consider and vote on the proposed merger with Santos Ltd.
In a joint statement, Santos and Oil Search said the Court had made orders for Oil Search to convene the meeting on Dec. 7 to consider and vote on the arrangement whereby Santos will acquire all the shares of Oil Search with Oil Search shareholders receiving 0.6275 new Santos shares for each Oil Search share held (OGJ Online, Sept. 10, 2021).
The Court also approved the distribution to Oil Search shareholders of an explanatory booklet providing information about the scheme and notice of meeting.
The comprehensive 730-page document includes an independent expert’s report prepared by Grant Samuel & Associates Pty Ltd. which has found the merger in the best interests of Oil Search shareholders in the absence of a higher offer.
If the merger is implemented, Oil Search shareholders will own approximately 38.5% of the new entity while Santos shareholders will have 61.5%.
Santos said that the combine would have a market capitalization of $21 billion (Aus.) and that the merger will unlock pre-tax synergies of US$90-115 million/year.
The PNG Government had previously expressed concern about the merger, saying it would result in a foreign company holding a high proportion of the country’s oil and gas resources and hence harm national interests.
Consummation of the deal will mean that the new Santos majority-held entity will become the largest shareholder in the ExxonMobil-operated PNG LNG joint venture, although it is widely tipped that some interest will be sold down.
The PNG Court gave its ruling after twice delaying the decision, originally scheduled for Oct. 27.