Santos Limited [ASX:STO] share price has increased by 16.47% today. Shares are currently trading at $5.91, after closing last week on $5.07.
The Adelaide-based company is the country’s third-largest energy producer, with a market cap of $12.30 billion.
Why the increase in share price?
The current surge is due to an announcement made by Santos this morning, stating that they had received a highly conditional bid from US-owned Harbour Energy Ltd.
The private-equity company has made three previous offers since August 2017.
Santos revealed in November it had turned down a $9.5 billion takeover approach from Harbour Energy in August, saying it undervalued the company, as reported by Yahoo Finance.
The current bid by Harbour values Santos at $4.98 per share or $6.50 per share.
Harbour plans to fund the takeover through a combination of debt and equity, with J.P Morgan and Morgan Stanley, equivalent to $7.75 billion.
What’s next for Santos Limited?
Santos said in their statement today that,
‘It is in the interests of shareholders to engage further with Harbour,’
‘Regardless of the outcome of engagement with Harbour, the board and management remain focused on continuing to deliver shareholder value through the transformation of Santos into a low cost, reliable and high performance business with strong growth potential’.
As reported by Bloomberg, RBC Capital Markets analyst Ben Wilson called it a knock-out bid which Santos would ‘struggle to turn down’.
For Money Morning
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