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SYDNEY, April 3 (Reuters) - Australian gas producer Santos Ltd said on Tuesday it would "engage with" Harbour Energy after receiving a $10.4 billion takeover offer from the U.S. company, its fourth unsolicited bid since August 2017.
The bid, valuing Santos at a 28 percent premium to its last close, would give Harbour access to a recently revived BOP Blow Out Preventer repair company gulf coast with a low cost of oil oil rig flanges gulf coast production and stakes in liquefied natural gas (LNG) in the Asia-Pacific, where demand is soaring.
News of the latest offer, the biggest inbound bid for a listed Australian BOP Blow Out Preventer repair company gulf coast since Unibail-Rodamco's $16 billion buy-out offer for shopping mall giant Westfield Corp, sent Santos shares soaring.
But even if accepted by Santos this time round, a deal may be fraught with political and regulatory risk: Australia's lingering energy supply crisis has stoked fears that companies that come under foreign ownership may ignore domestic needs.
"The price is definitely in the ball park of something that we will seriously consider," said Andy Forster, senior investment officer at Argo Investments, Santo's ninth-largest shareholder.
Investment bank RBC Capital Markets described the bid as a "knock-out" in a note to clients on Tuesday.
The offer values Adelaide-based Santos at A$6.50, per share, a 28 percent premium to the company's last closing share price of A$5.07. Santos' shares close 16.2 percent higher at A$5.89.
The latest offer price is also 43 percent higher than Harbour's first attempt last year.
Expansion Plans
Harbour's chief executive Linda Cook said the plan for Santos was "one of growth, in Australia, Papua New Guinea and beyond".
"We are prepared to move expeditiously through the due diligence phase to immediately begin the government review and approval process," Cook said in a phone interview.
But given the highly politicised nature of the Australian domestic gas landscape and Santos' key role there, analysts and investors see government approval as a key risk to any deal.
A takeover would be subject to government approvals and will be scrutinised by Australia's Foreign Investment Review Board (FIRB), which provides recommendations to the government. Cook said Harbour was preparing its FIRB application.
Santos' more sensitive assets include its interest in the Gladstone LNG project in the Australian state of Queensland and the strategically important Cooper Basin in the country's east, where significant onshore oil and gas deposits are located.
"Any buyer of Santos would need to be prepared for ongoing engagement with government and public scrutiny for many years going forward," said Saul Kavonic of energy consultancy Wood Mackenzie.
