Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Despite a momentary memory lapse from <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a>, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> <a target="_blank">confirmed</a> on the 20 July it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board on the 25 June.</p>
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<p>Santos proposed Oil Search shareholders receive 0.589 new Santos shares for each Oil Search share held, resulting in Oil Search shareholders holding 37% of the merged group and Santos shareholders 63%. The implied transaction price, to be implemented via a Scheme, was A$4.25 per Oil Search share - based on Santos’ closing price on 24 June 2021 - or a 12.3% premium to Oil Search's closing price on the same day.</p>
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<p>Oil Search considered the terms were not fair but <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02397158-2A1310798?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">agreed</a> there was strategic logic combining with Santos. </p>
<p>In <em><a href="https://skr.ma/epYxh" target="_blank" rel="noopener">Santos/Oil Search: Getting Facts Straight</a></em>, I recommended buying Oil Search, with a view towards an improved ratio upwards of ~0.66x, or ~25% premium to last close using both share prices as 24 June. </p>
<p>This morning Santos <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02402372-2A1313090?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped</a> the consideration by 6.5% to 0.6275 new Santos shares for every Oil Search share.  This would give Oil Search's shareholders 38.5% of the merger group. The implied transaction price of A$4.52/share  - if using Santos price on the 24 June - is a 19.7% premium to the undisturbed price. </p>
<p>The Oil Search board recommends the Offer in the absence of superior proposal. Due diligence has been afforded.</p>
<p>More below the fold.</p>
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<p></p>
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Despite a momentary memory lapse from Oil Search Ltd (OSH AU), Santos Ltd (STO AU) confirmed on the 20 July it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board on the 25 June.


Santos proposed Oil Search shareholders receive 0.589 new Santos shares for each Oil Search share held, resulting in Oil Search shareholders holding 37% of the merged group and Santos shareholders 63%. The implied transaction price, to be implemented via a Scheme, was A$4.25 per Oil Search share - based on Santos’ closing price on 24 June 2021 - or a 12.3% premium to Oil Search's closing price on the same day.


Oil Search considered the terms were not fair but agreed there was strategic logic combining with Santos. 
In Santos/Oil Search: Getting Facts Straight, I recommended buying Oil Search, with a view towards an improved ratio upwards of ~0.66x, or ~25% premium to last close using both share prices as 24 June. 
This morning Santos bumped the consideration by 6.5% to 0.6275 new Santos shares for every Oil Search share.  This would give Oil Search's shareholders 38.5% of the merger group. The implied transaction price of A$4.52/share  - if using Santos price on the 24 June - is a 19.7% premium to the undisturbed price. 
The Oil Search board recommends the Offer in the absence of superior proposal. Due diligence has been afforded.
More below the fold.





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<p>After <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02395702-2A1310049?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">rejecting</a> two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a> has ostensibly supported the Consortium's improved tilt of $2.95/share.</p>
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<p>The Consortium (KKR/OTPPB)'s latest proposal, up from the initial Offer of $2.70/share, was considered by Spark's board to be in the interest of its shareholders to engage further. As such, Spark has provided the Consortium with due diligence on a non-exclusive basis.</p>
<p>This Offer remains pre-conditional, and is subject to satisfactory DD, together with board approval from both KKR and OTPPB.</p>
<p>A firm Offer, should one unfold, would be subject to FIRB approval, and the approval from Spark's shareholders at a Scheme Meeting.</p>
<p>Yet this looks like a full (er) Offer than the one rejected on the 15 July.</p>
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<p>More below the fold.</p>
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After rejecting two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company Spark Infrastructure (SKI AU) has ostensibly supported the Consortium's improved tilt of $2.95/share.


The Consortium (KKR/OTPPB)'s latest proposal, up from the initial Offer of $2.70/share, was considered by Spark's board to be in the interest of its shareholders to engage further. As such, Spark has provided the Consortium with due diligence on a non-exclusive basis.
This Offer remains pre-conditional, and is subject to satisfactory DD, together with board approval from both KKR and OTPPB.
A firm Offer, should one unfold, would be subject to FIRB approval, and the approval from Spark's shareholders at a Scheme Meeting.
Yet this looks like a full (er) Offer than the one rejected on the 15 July.


More below the fold.


Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up

<p>When questioned by analysts at an investor briefing on the 19 July as to any takeover offers, <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a>'s chairman Rick Lee denied it had received a change-of control approach.</p>
<p>That wasn't entirely incorrect. It wasn't even close. </p>
<p>The day after that briefing, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> <a href="file:///D:/Quiddity/Oil%20search/2924-02396991_NPS-2A1310715.pdf" target="_blank" rel="noopener">confirmed</a> that on 25 June 2021 it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board.</p>
<p>The proposal, to be implemented through a Scheme, would result in Oil Search shareholders receiving 0.589 new Santos shares for each Oil Search share held. Upon completion, Oil Search shareholders would own 37% of the merged group and Santos shareholders 63%.</p>
<p>The implied transaction price was A$4.25 per Oil Search share, based on Santos’ closing price on 24 June 2021, or a 12.3% premium to Oil Search's closing price on the same day.</p>
<p>Oil Search <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02397158-2A1310798?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">agreed</a> there was strategic logic combining with Santos, but that the terms of the combo were "demonstrably not" fair. </p>
<p>In addition, Oil Search's MD Kerian Wulff <a href="file:///D:/Quiddity/Oil%20search/2924-02396558-2A1310512.pdf" target="_blank" rel="noopener">resigned</a> for health reasons and that:</p>
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<p>following the receipt of recent concerns and complaints about his (Wulff's) behaviour .... the Board considered that Dr Wulff had behaved in a manner inconsistent with the standards expected by the Board in relation to his management style.</p>
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<p>Lots more below the fold.</p>

When questioned by analysts at an investor briefing on the 19 July as to any takeover offers, Oil Search Ltd (OSH AU)'s chairman Rick Lee denied it had received a change-of control approach.
That wasn't entirely incorrect. It wasn't even close. 
The day after that briefing, Santos Ltd (STO AU) confirmed that on 25 June 2021 it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board.
The proposal, to be implemented through a Scheme, would result in Oil Search shareholders receiving 0.589 new Santos shares for each Oil Search share held. Upon completion, Oil Search shareholders would own 37% of the merged group and Santos shareholders 63%.
The implied transaction price was A$4.25 per Oil Search share, based on Santos’ closing price on 24 June 2021, or a 12.3% premium to Oil Search's closing price on the same day.
Oil Search agreed there was strategic logic combining with Santos, but that the terms of the combo were "demonstrably not" fair. 
In addition, Oil Search's MD Kerian Wulff resigned for health reasons and that:

following the receipt of recent concerns and complaints about his (Wulff's) behaviour .... the Board considered that Dr Wulff had behaved in a manner inconsistent with the standards expected by the Board in relation to his management style.

Lots more below the fold.

Santos/Oil Search: Getting Facts Straight

<p>Aussie poles and wires company <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02395702-2A1310049?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">rejected</a> two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB).</p>
<p>KKR/OTPPB's first proposal was A$2.70/share, by way of a Scheme, which would be reduced by the 1H21 dividend of A$0.0625/share. KKR/OTPPB subsequently reloaded with A$2.80/share - paltry 12.9% to last close - which was also summarily rejected on the grounds it undervalued Spark.</p>
<p>Spark added:</p>
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<p>Whilst not granting access to due diligence, in order to be constructive, the board of Spark Infrastructure informed the consortium that it was prepared to provide limited information on Spark Infrastructure’s business and its prospects.</p>
</blockquote>
<p>More below the fold.</p>

Aussie poles and wires company Spark Infrastructure (SKI AU) has rejected two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB).
KKR/OTPPB's first proposal was A$2.70/share, by way of a Scheme, which would be reduced by the 1H21 dividend of A$0.0625/share. KKR/OTPPB subsequently reloaded with A$2.80/share - paltry 12.9% to last close - which was also summarily rejected on the grounds it undervalued Spark.
Spark added:

Whilst not granting access to due diligence, in order to be constructive, the board of Spark Infrastructure informed the consortium that it was prepared to provide limited information on Spark Infrastructure’s business and its prospects.

More below the fold.

Spark Infra (SKI AU): KKR & OTPPB's Tilts Falls Short

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p><a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a> is Australia’s largest airport and the only listed airport on ASX. Sydney Airport revealed a conditional, non-binding indicative offer from a consortium (Sydney Aviation Alliance) comprising of IFM, QSuper and Global Infrastructure Partners. The indicative offer of A$8.25 per share is a 42% premium to the unaffected price of A$5.81 (2 July). The offer price will be reduced by any dividends declared or paid prior to the scheme taking effect. The proposed transaction would be implemented via a scheme of arrangement.</p><p>The Board noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and unanimous recommendation by the Board in the absence of a superior offer. </p><p>Crucially, the offer is conditional on UniSuper agreeing to reinvest its equity interest for an equivalent equity interest in the consortium’s holding vehicle. UniSuper is the largest shareholder who represents 15.28% of the outstanding shares. In response to the indicative offer, UniSuper said that it saw “<em>merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners.</em>" UniSuper will make a final decision after all details have been considered.</p><p>We think that the indicative offer is opportunistic as it offers a modest premium to pre-COVID-19 share prices. However, airports in Australia have been hard hit by tough international travel restrictions, sporadic lockdowns and slow vaccination roll-out. The timing and the shape of a recovery (particularly the crucial international travel) remains highly uncertain suggesting the shares are more suited to the patient long-term investor.</p><div class="content-highlight"><p>Nevertheless, this non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice other infrastructure bidders to start a bidding war. At the last close price of A$7.78, the shares are trading at a 6% gross spread to the indicative offer.</p></div>

Sydney Airport (SYD AU) is Australia’s largest airport and the only listed airport on ASX. Sydney Airport revealed a conditional, non-binding indicative offer from a consortium (Sydney Aviation Alliance) comprising of IFM, QSuper and Global Infrastructure Partners. The indicative offer of A$8.25 per share is a 42% premium to the unaffected price of A$5.81 (2 July). The offer price will be reduced by any dividends declared or paid prior to the scheme taking effect. The proposed transaction would be implemented via a scheme of arrangement.The Board noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and unanimous recommendation by the Board in the absence of a superior offer. Crucially, the offer is conditional on UniSuper agreeing to reinvest its equity interest for an equivalent equity interest in the consortium’s holding vehicle. UniSuper is the largest shareholder who represents 15.28% of the outstanding shares. In response to the indicative offer, UniSuper said that it saw “merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners." UniSuper will make a final decision after all details have been considered.We think that the indicative offer is opportunistic as it offers a modest premium to pre-COVID-19 share prices. However, airports in Australia have been hard hit by tough international travel restrictions, sporadic lockdowns and slow vaccination roll-out. The timing and the shape of a recovery (particularly the crucial international travel) remains highly uncertain suggesting the shares are more suited to the patient long-term investor.Nevertheless, this non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice other infrastructure bidders to start a bidding war. At the last close price of A$7.78, the shares are trading at a 6% gross spread to the indicative offer.

Sydney Airport Gets an Opportunistic Indicative Offer

Australia

Sydney Airport operates the Sydney, Australia airport. The Company develops and maintains the airport infrastructure and leases terminal space to airlines and retailers.

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Sydney Airport (SYD AU)

Santos and Oil Search Agree on Terms

This remains a non-binding offer but ostensibly is done. Yet Wulff's resignation, Mubadala's sell-down, and chairman Rick Lee's odd short-term...

David Blennerhassett

Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up

Assuming ~5 months to complete, this is trading at a gross/annualised return of 5%/12.6%. I don't expect any shareholders to oppose, and FIRB...

David Blennerhassett

Santos/Oil Search: Getting Facts Straight

I would expect Oil Search to engage at ~0.66x, or ~25% premium to last close using both share prices as 24 June. I'd be buying here. I would expect...

David Blennerhassett

Spark Infra (SKI AU): KKR & OTPPB's Tilts Falls Short

This appears a full offer for Spark, especially noting greater regulatory oversight on expected returns. KKR/OTTB have deep pockets. But I'm...

David Blennerhassett

Sydney Airport Gets an Opportunistic Indicative Offer

The non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice...

Arun George

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