US private equity firm Harbour Energy has raised its bid for Santos to about $US10.9 billion ($A14.5 billion) in what could be a decisive play for the ASX-listed energy producer.
Harbour on Monday lifted its bid to $US5.21 ($A6.95) per share, up from the $US4.98 first offered on April 3 – and subsequently reaffirmed last week – on condition Santos increases its oil price hedging for the next two years.
Harbour’s move on Monday almost immediately superseded another hike in the offer – to $US5.12 – made on Saturday, May 19.
The revised proposal indicated the offer price would be further increased to the equivalent of $A7.00 per share if Santos agrees to hedge 30 per cent of its oil-linked production in 2020.
RBC Capital Markets energy analyst Ben Wilson said the offer may have sweetened the deal enough to gain approval.
“The new higher bids underline Harbour’s desire to receive the board recommendation it needs and in our view staves off any ambitions from an interloper,” Mr Wilson wrote in a research note.
“The nature of the revised bids and the timing of the offers, with one received on Saturday and another one on Monday, suggest to us that engagement with the Santos board is high and a recommendation may be forthcoming this week.”
Santos shares closed 11 cents, or 1.8 per cent, higher at $6.36.
Santos said its independent directors still need to consider the revised proposal and will update shareholders on their view.
Shareholders and the Foreign Investment Review Board would both need to approve any takeover.