Oil Search (ASX:OSH) share price on watch — board tipped to fight merger

It might be about to get messy for Oil Search and Santos.
The post Oil Search (ASX:OSH) share price on watch — board tipped to fight merger appeared first on The Motley Fool Australia. –

The Oil Search Ltd (ASX: OSH) share price is in focus following reports a bidding war could erupt between the company and Santos Ltd (ASX: STO).

Santos lobbed a $23 billion confidential merger offer at Oil Search late last month.

The offer, and its rejection, was announced on Tuesday. Oil Search’s board said the $4.25 scrip consideration – a 12.3% premium on the Oil Search share price as of 24 June – didn’t appropriately value Oil Search’s shares.

Santos is now expected to up its offer. But whether it will increase its consideration, or by how much, is yet to be seen. Additionally, some analysts are tipping the Oil Search board will battle against the merger.

Right now, the Oil Search share price is $4.08. That’s 10.87% higher than it was at Monday’s close after the company battled the fallout of its CEO’s surprise departure.

Let’s take a look at what’s now expected of Santos’ offer for the Papua New Guinea-based oil and gas producer.

Oil Search to enter a bidding war?

The Oil Search share price is on watch as the market waits to see if Santos will continue campaigning for control of the company.

Santos’ offer would have seen the ASX 200 oil producers merged into one company, with Oil Search shareholders owning 37% of the resulting entity.

Woodmac senior analyst Daniel Toleman told The Australian the firm expects Oil Search won’t submit to Santos’ merger plans easily. He said:

At the current share price, the Oil Search board will likely believe that a merger with Santos would not provide full value to Oil Search shareholders. As a result, we expect the board to fight off the merger attempt.

However, Bernstein analyst Neil Beveridge, who was also quoted by The Australian, said a bidding war would likely harm the Oil Search share price.

For shareholders, attention is now focused on Oil Search and whether Santos will up their offer. We expect it will be competitive. However, a bidding war is the last thing investors will want.

MST Marquee analyst Mark Samter also spoke to the publication.

He said Oil Search should be wary of rejecting an increased offer. Samter said doing so could leave it down a CEO, numerous board members, and struggling to progress in Alaska. Such a situation would likely have dire consequences for the Oil Search share price.

Samter also spoke of Santos’ CEO Kevin Gallagher, saying:

Having watched Kevin operate this past 5 or so years, I think it would be foolish of us to think he might not have a few nice little tricks up his sleeve.

Oil Search share price snapshot

Oil Search’s shares have been performing well lately.

They are currently 8.22% higher than at the start of 2021. They have also gained 25.54% since this time last year.

The ASX 200 oil producer has a market capitalisation of around $8.4 billion, with approximately 2 billion shares outstanding.

The post Oil Search (ASX:OSH) share price on watch — board tipped to fight merger appeared first on The Motley Fool Australia.

Should you invest $1,000 in Oil Search right now?

Before you consider Oil Search, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Oil Search wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

5 things to watch on the ASX 200 on Friday

Santos (ASX:STO) share price jumps on record quarterly sales
What’s happening with ASX 200 oil shares this week?

5 things to watch on the ASX 200 on Thursday

Here are 3 top trading ASX 200 shares this Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!