Santos Limited (ASX:STO) made a confidential, non-binding indicative proposal to acquire Oil Search Limited (ASX:OSH) from Wilson Asset Management (International) Pty Limited, BlackRock, Inc. (NYSE:BLK), UBS Group AG (SWX:UBSG) and other shareholders for AUD 8.4 billion on June 25, 2021. Santos Limited entered into Definitive agreement to acquire Oil Search Limited on September 10, 2021. The Merger Proposal provides that the transaction would be implemented through a Scheme of Arrangement under which Oil Search shareholders would receive 0.589 new Santos shares for each Oil Search share held. Following approval of the Scheme, Oil Search shareholders would own 37% of the merged group and Santos shareholders would own 63%. The ownership ratio implies a transaction price of AUD 4.25 per Oil Search share, based on Santos' closing price on June 24, 2021.

On August 2, 2021, Santos made an improved, non-binding and indicative merger proposal for Oil Search. Under the terms of the transaction, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a scheme of arrangement. The revised merger proposal implies a transaction price of AUD 4.29 per Oil Search share. Following approval of the scheme, Oil Search shareholders will own approximately 38.5% of the merged group and Santos shareholders will own approximately 61.5%. Santos and Oil Search are liable to pay a break fee of AUD 80 million each under specific circumstances. Wilson Asset Management has backed the deal and it remained in favour of the merger proceedings. Following the completion of the Merger, three non-executive directors from Oil Search will join the Santos Board. Santos' head office will remain in Adelaide.

Following the merger, there would be an opportunity for Oil Search directors to join the board of Santos. Senior executives of Oil Search would join a combined management team of the merged entity. The transaction is subject to due diligence, negotiation and execution of Merger Implementation Agreement, there being no material change to Oil Search's business, operations or capital structure, among others. The revised proposal is subject to conditions such as due diligence, Oil Search shareholder approval, PNG court approval, definitive agreement and regulatory approvals including clearance from the Pacific island country's government. A transition committee would be established with representatives from both companies in order to achieve a smooth transition to a merged operating model.

On July 9, 2021 Santos received a letter from Oil Search which acknowledged the strengths of the combined company and the rationale for the merger proposal but noted that the proposal did not offer appropriate value for Oil Search shareholders or a basis on which discussions could be progressed. On July 20, 2021, Oil Search rejected the bid and stated that it is open to receiving a revised proposal which more appropriately reflects the value which Oil Search would bring to any combined entity, however at this stage no such proposal has been forthcoming. Santos continues to believe that the Merger Proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders. As of August 2, 2021, Subject to each party completing due diligence on the other to its satisfaction and entry into a merger implementation agreement, the Board of Directors of Oil Search intend to unanimously recommend the revised merger proposal in the absence of a superior proposal and subject to an independent expert concluding that the scheme of arrangement is in the best interests of Oil Search shareholders.

As on September 6, 2021, Oil Search and Santos have agreed to extend the exclusive due diligence period for a further 1 week to September 13, 2021. The Papua New Guinea government has raised concerns about a transaction. The Papua New Guinea Petroleum Minister, Kerenga Kua said that agreement might be harmful to both the government and the people. As of October 4, 2021, shareholder of Oil Search Limited believed the company is being handed over too cheaply. The transaction requires the approval of 75% shareholders of Oil Search Limited. Securing the 75% vote might not be straightforward given several large institutional investors were yet to be convinced of the merger. Shareholder meeting of Oil Search Limited will be held on November 29, 2021. On September 10, 2021, Board of Oil Search Limited unanimously approved the deal. As on November 11, 2021, The National Court of Papua New Guinea advised for the distribution of Scheme Booklet and convening of Scheme Meeting on December 7, 2021. The Independent Expert has concluded that the Merger is in the best interests of Oil Search shareholders in the absence of a superior proposal and The Oil Search Board continues to unanimously recommend that Oil Search shareholders vote in favor of the Scheme at the Scheme Meeting. The Deed pool has been signed on November 9, 2021 for the transaction. As on December 6, 2021, the transaction is approved by PNG Securities Commission. As of December 7, 2021, the transaction was approved the majority of the shareholders of Oil Search Limited. On December 8, 2021, Independent Consumer and
Competition Commission of Papua New Guinea approved the transaction. On December 9, 2021, National Court of Papua New Guinea approved the scheme of arrangement. Oil Search shares will be last traded on ASX and PNGX on December 10, 2021. As of December 10, 2021, scheme has become legally effective. The scheme implementation date is December 17, 2021.

Citigroup Inc. (NYSE:C) and J.B. North & Co Pty Ltd acted as financial advisors while Tony Damian, Robert Merrick and Peter O'Sullivan of Herbert Smith Freehills and Dentons Australia Limited acted as legal advisors to Santos. The Goldman Sachs Group, Inc. (NYSE:GS) and Macquarie Capital (Australia) Limited acted as financial advisors and Allens acted as legal advisor to Oil Search Limited. Rothschild & Co SCA (ENXTPA:ROTH) acted as financial advisor to the board of Oil Search Limited. Coleson Bruce of Shearman & Sterling LLP acted as legal advisor to Oil Search Limited. Grant Samuel Group Limited acting as an independent expert to provide an opinion on transaction. Ernst & Young Australia acted as an accountant and Computershare Investor Services Pty Limited acted as a registrar to Oil Search.

Santos Limited (ASX:STO) completed the acquisition of Oil Search Limited (ASX:OSH) from Wilson Asset Management (International) Pty Limited, BlackRock, Inc. (NYSE:BLK), UBS Group AG (SWX:UBSG) and other shareholders on December 17, 2021. As per update on December 20, 2021, Oil Search Limited will be removed from the Official List at the close of trading.