Today, shares of Australian oil and gas company, Santos Ltd (ASX: STO), have jumped over 15% following a proposed takeover bid from Scepter Partners.
In a statement to the ASX, Santos said it received a non-binding proposal from Scepter earlier this week, subsequently meeting with the group to discuss its offer that was pitched at $6.88 per share. The all-cash offer is a sharp 26% premium to Santos' closing share price yesterday.
However, the offer is also a huge 46% discount to the company's share price at this time last year. "The Santos Board has met to consider the proposal and decided to reject it," the company said in its ASX filing. "The Proposal is considered to be opportunistic in nature and does not reflect the fair underlying asset value of the company," it added.
In August Santos decided it'd undertake a strategic review of its options to restore and optimise shareholder value following steep falls in commodity prices and concern from shareholders. The company said this week's proposal was subject to "numerous" conditions "some of which would be adverse to Santos' continued evaluation of other alternatives in its current strategic review process."
Scepter is a direct investment business controlled by a syndicate of ruling families, ultra-high-net-worth industrialists and sovereign wealth funds, according to Santos. The company said it'll notify shareholders of any material developments.
Foolish takeaway
The Santos proposal follows another failed takeover attempt by oil and gas major, Woodside Petroleum Limited (ASX: WPL), for shares of Oil Search Limited (ASX: OSH). However, with a falling Australian dollar, depressed energy prices and very cheap looking shares, I wouldn't be surprised if both Santos and Oil Search shareholders realise increased value for their holding in the future.
