Oil Search shareholders will vote on December 7 on a merger deal with Australian LNG firm Santos, following approval from a Papua New Guinea court.
Papua New Guinea’s National Court made the order on Thursday during the first hearing regarding the proposed merger, according to a statement by Santos and Oil Search.
In September, Oil Search and Santos have entered into a definitive merger deal that would create an LNG player worth about A$21 billion ($15.5 billion).
Following the completion of the scheme, Oil Search shareholders would own about 38.5 percent of the merged group and Santos shareholders would own 61.5 percent.
Oil Search has a stake in the ExxonMobil-led PNG LNG project but also the planned Papua LNG development.
The two firms expect to complete the transaction by year-end, subject to customary conditions including Oil Search shareholder approval.
Oil Search shareholders would benefit from the merger, report says
Besides the date for the vote, the court also approved the distribution to Oil Search shareholders of an explanatory booklet providing information about the scheme.
The 730-page document includes a report by Oil Search’s appointed independent expert firm, Grant Samuel.
In its report, the firm has concluded that the merger is in the best interests of shareholders in the absence of a superior proposal.
However, the firm has suggested that Oil Search shareholders would contribute a greater proportion to the underlying value of the merged group.
“Oil Search shareholders are contributing around 43-44% of the aggregate estimated underlying value of the merged group compared to the 38.5% of the merged group that they will receive,” it said.
Despite this, Grant Samuel’s “view is that Oil Search shareholders are likely to be better off if the merger proceeds than if it does not,” it said.