① Australian energy giants Woodside and Santos confirmed last week that they have begun negotiations on a potential merger deal; ② A person with direct knowledge of the negotiations said that the merger agreement may not be finalized until at least February next year; ③ Currently, both companies are hiring banking groups as advisors.
Financial News Agency, December 14 (Editor Zhou Ziyi) A move that could trigger potentially major changes in the global liquefied natural gas (LNG) industry is underway.
Last week, Australian energy giants Woodside and Santos confirmed that they have begun negotiations on a potential merger deal with a valuation of up to 80 billion Australian dollars (52 billion US dollars) with the aim of creating a leading global oil and gas giant.
According to reports on Thursday (December 14), a person with direct knowledge of the negotiations said that it is unlikely that this cooperation plan will be finalized until at least February next year. Since Australia is a holiday in December and January, this means that the deal is unlikely to be completed during this time.
Woodside is the larger of the two companies, with a market capitalization of 56.91 billion Australian dollars, while Santos has a market value of 22.1 billion Australian dollars. Woodside said that negotiations with Santos are confidential, and it is uncertain whether an agreement can be reached.
*Negotiations have just started**
The unnamed person also pointed out that bankers are currently stepping in to obtain data and details about the two companies, and that work on the potential deal has only just begun.
It is reported that Citigroup and Goldman Sachs are providing advisory services for Santos on this deal, while Woodside's adviser is Morgan Stanley.
According to another person with direct knowledge of the negotiations, so far, only about 5% of the progress needed has been achieved, with the larger Woodside having been promoting negotiations between the two companies.
Two people familiar with the matter also said that the proposed merger deal would give Woodside an advantage on a larger scale, adding that since industry integration is already underway, it is difficult for Woodside to find suitable acquisition targets elsewhere in the world.
Santos CEO Kevin Gallagher said in a year-end video to employees on Wednesday that Woodside has had many contacts with Santos over the past year or so about the deal.
Currently, Santos and his advisors have begun reaching out to shareholders to seek their views on potential deals.
Matthew Haupt, a long-term shareholder of Santos and portfolio manager at Wilson Asset Management, said, “We have been talking to a large number of investment bankers. They are all trying to set the most suitable price for Santos. This is the lowest price Woodside can pay, and it still satisfies Santos shareholders.”
Macquarie analysts said on Thursday that based on the synergies brought about by the merger of the two companies, Woodside needed to propose a purchase offer of $8.70 to $9 per share for Santos.