A potential Woodside Santos merger is being discussed, but it’s not sure thing
Nick Sundich, December 8, 2023
Last night, a bombshell was dropped on the ASX with a plans for a Woodside Santos merger being leaked to the media, forcing both companies to address the rumours.
A Woodside Santos merger is being discussed
Santos and Woodside told both their investors that talks were on, but no certainty to proceed. ‘Discussions remain confidential and incomplete, and there is no certainty that the discussions will lead to a transaction,’ the latter company said. The former company said the same thing, but also that it was ‘assessing a range of alternative structural options with a view to unlocking value as referred to on Santos’ investor day’.
It caps off a busy week for M&A activity with a hostile bid for Perpetual yesterday, as well as a proposed merger involving uranium play 92 Energy (ASX:92E) being unveiled to investors today.
Why the merger?
Woodside is already the largest oil and gas stock on the ASX. However, a Woodside Santos merger would create one of the largest companies in the world. A mega merger would not be an anomaly – in the last 2 months, ExxonMobil bought Pioneer Natural Resources for US$60bn and Chevon bought Hess for US$53bn.
The logic there was that bigger is better and that is what both companies likely believe. Santos has long been regarded as undervalued by its investors and Woodside has not exactly shined either even in spite of high oil and gas prices.
Is it going to happen?
Whether or not it is a good deal will depend on the terms of the binding offer and then what eventuates after that. Shareholders may judge that question just by the premium, although we think they should not get their hopes up for a huge premium, if past precedent is any guide. Investors of all stocks in the oil and gas sector will watch the talks with interest!
What are the Best ASX Stocks to invest in right now?
Check our ASX buy/sell tips
Blog Categories
Get Our Top 5 ASX Stocks for FY25
Recent Posts
Trump vs. Jerome Powell: What Happens to the Market If Powell Is Fired?
The relationship between President Donald Trump and Federal Reserve Chair Jerome Powell has often been tumultuous, particularly around decisions regarding…
Telix Pharmaceuticals (ASX:TLX): It’s made ~A$1.7bn in revenue from Illucix, but here’s why the best is yet to come!
What would you have thought if you were told 5 years ago you would see Telix Pharmaceuticals as a successful…
Anti Woke ETFs: Do they practice what they preach and have they outperformed since Trump’s return to power?
Have you ever heard of so-called ‘Anti Woke ETFs’? If you’re sick of companies that are big on ESG, this…