By David Winning 
 

SYDNEY--Santos Ltd. said it approached Oil Search Ltd. about a possible merger last month, but its proposal to create an energy company with a market value of 22 billion Australian dollars (US$16.1 billion) was rejected.

Santos said it offered 0.589 of its own shares in exchange for each Oil Search share on issue. A deal would have led to Santos shareholders owning 63% of the combined company, with Oil Search investors holding the remaining stock.

The proposal implied a value of A$4.25 for each Oil Search share, Santos said, representing a 16% premium to the stock's closing price on Monday.

"The potential merger of Santos and Oil Search is a logical combination of two industry leaders to create an unrivalled regional champion of size and scale," Santos said in a regulatory filing.

Oil Search is Papua New Guinea's largest oil producer and owns a minority stake in the Exxon Mobil Corp.-operated PNG LNG gas-export project in the country, which also counts Santos as an investor. Oil Search also owns undeveloped oil reserves in Alaska that it hopes to develop if it can bring in another investor.

News of the merger proposal comes a day after Oil Search said Managing Director Keiran Wulff had resigned for health reasons, and named Chief Financial Officer Peter Fredricson as acting chief executive with immediate effect.

 

Write to David Winning at david.winning@wsj.com

 

(END) Dow Jones Newswires

July 19, 2021 20:13 ET (00:13 GMT)

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