Santos' $6.2 bln buyout of rival Oil Search to be credit neutral - Fitch

STO

10/08/2021 01:11

** Ratings agency Fitch says Santos'  STO.AX  proposed
takeover of Australian peer Oil Search  OSH.AX  will be credit
neutral for STO's 'BBB' rating
    ** OSH said last week it intended to recommend an improved
buyout offer from STO, worth A$8.4 bln ($6.16 bln), in a deal
that would create a top-20 global oil and gas co  urn:newsml:reuters.com:*:nL1N2P80ME
    ** Fitch says benefits of greater scale from the deal will
be offset by more exposure to non-Australian production, lower
proportion of consumer price-linked contracted domestic
revenues, and higher investment
    ** Says ~35% of the combined co's output will be from Papua
New Guinea (PNG) and STO will face greater country-risk exposure
as PNG's sovereign credit profile is weaker than that of
Australia
    ** Adds that it expects the merger to create synergies which
will support cash flows while investment ramps up
    ** Up to Monday's close, STO up 2.4% this year, while OSH up
5.9%

($1 = 1.3631 Australian dollars)

 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))