Santos in agreed offer for Eastern Star Gas

EASTERN Star shares rose 43 per cent after Santos agreed to buy up the holdings it doesn't already own in Eastern.

Coal-seam gas

SANTOS said today it has agreed to acquire the 80 per cent of Eastern Star Gas that it doesn't already own in a share-based deal it said values the target at about $924 million.

Australia's third largest oil and gas producer also agreed to sell a 20 per cent interest in Eastern Star's coal seam gas permits to power generation company TRUenergy, which is the Australian unit of CLP Holdings.

Eastern Star shareholders will get 0.06803 Santos share for each of their shares, which Santos said values them at 90 cents each at Friday's closing prices. Eastern Star Gas shares last traded at 59.5c.

At the ASX today, Eastern Gas shares were up 25.5 cents, or 42.9 per cent, at 85c on news of the bid.

Santos shares were down 42c (3.2 per cent) at $12.81.

The deal will boost Santos's interest in coal seam gas properties in New South Wales, positioning it to meet domestic energy demand and potentially feed planned gas export projects, the company said.

TRUenergy recently boosted its share of the domestic electricity market by acquiring power retailer EnergyAustralia from the NSW government.

With AAP