John Ellice-Flint linked to new takeover bid for Santos

Is John Ellice-Flint behind the latest $9.48 billion takeover bid for his old company, Santos?

Speculation abounds that the Blue Energy executive chairman, who last year was part of a consortium that lobbed a takeover effort for the listed oil and gas business he used to run, is part of a new group of supporters eager to buy the Adelaide-based company.

Adding credibility to the suggestion is the sighting of the Australia-born businessman and petroleum geologist yesterday in Sydney’s prestigious Governor Phillip Tower, considered the key address for the who’s who of Wall Street banks such as Goldman Sachs, Merrill Lynch and Greenhill, not to mention high-profile law firms.

Santos yesterday confirmed that Harbour Energy, backed by EIG Global Energy Partners, made a failed $9.48bn takeover bid for the company in August, offering $4.55 a share.

JPMorgan was revealed by The Australian online yesterday to be the consortium’s adviser, while Highbury Partnership remains tight-lipped as to whether it had an involvement.

It was Highbury that advised Scepter Partners when it bid for Santos in October 2015, offering $7.1bn for the company. The $6.88 a share cash bid was rejected by the Santos board.

Mr Ellice-Flint was part of the approach then and he has been known to be unhappy with the way the company has been run, voicing his concerns publicly at the company’s annual meeting in Adelaide in 2013.

Mr Ellice-Flint was replaced by David Knox as Santos chief in March 2008, having set the company on a path to export LNG from coal-seam gas fields in Queensland.

He has remained a shareholder, with his stake at one time worth as much as $55 million.

While JPMorgan was involved in the Harbour Energy bid, the understanding is that the latest suitor has not yet lined up any funding package.

The expectation is that if a deal does proceed, a consortium of other banks — probably those from out of the US — will be brought in to fund the deal, given its size.

Defence advisers for Santos are Deutsche and J.B. North & Co, while former Lazard Australia head John Wylie is thought to be around the hoop.

Santos said a non-binding bid of $4.55 a share was made by Harbour to buy a controlling or near controlling stake in energy assets globally on August 14.

The board rejected the approach on the basis that the indicative price was inadequate and the sources of funds were uncertain.

The company’s shares have recovered from lows of about $2.63 early last year, about the time it was recapitalised to drive down its debt levels while the oil price was trading at low levels.

Stocks have lifted in price across the resources sector with commodity prices increasing, including those for oil.

Any buyer will have to win over China’s Hony Capital and ENN, which collectively own about 15 per cent of Santos, but they may see any bid as favourable now that it is up 10 per cent on its original investment, according to analysts.

Hony took a stake in Santos as part of a $2.5bn equity raising in 2015 but sold its then 11.7 per cent holding to ENN.

Additional reporting: Ben Wilmot