It’s an object lesson in how not to use semantics to deal with a takeover bid by another name. In June, Oil Search was approached by Santos with a proposal for a “merger” to form an oil and gas “regional champion”. But on Monday’s investor call, chairman Rick Lee misled the market by declaring that the company had not received any takeover approaches.
Oil Search chairman Rick Lee now concedes the “strategic logic” of a merger, but wants a higher price. Steven Siewert
The call was supposed to bring clarity over the shock resignation, less than 18 months into the role, of CEO Keiran Wulff. There was confusion over whether the trigger was health issues or whistleblower complaints of bad behaviour, and what the board knew.
Instead, the word games made the confusion much worse.
Santos quickly released the correspondence that showed Oil Search digging in to reject any engagement on the proposed merger. This forced Mr Lee to issue an embarrassing “clarification” that belatedly corrected the record.
His original denial was meant to deflect suggestions Oil Search is a “lame duck” takeover target, amid share price underperformance and lack of faith in the company’s ability to execute its LNG expansion strategy in Papua New Guinea and new oil projects in Alaska.