Stock Market to be Affected by Merger

by PNG Business News - September 20, 2021

Photo Credit: PNGX

Market capitalisation will drop by 30 per cent if Oil Search leaves the PNG Stock Exchange (PNGX) due to a possible Santos merger, says PNGX chairman David Lawrence.

The PNG stock market is currently valued at K120 billion, according to the PNG Securities Commission, with 13 businesses listed.

According to Lawrence, Oil Search is an important component of the PNG market, and PNGX is hopeful that Santos will join if the deal goes through.

He also stated that the existing 5,000 Oil Search investors in PNG will have continued access to the market.

“That change increases the visibility of the Papua New Guinea market internationally which further serves to attract international investment,” Lawrence said.

“We are hoping and believe the PNG Government is also working towards Santos’ listing in Papua New Guinea.”

The proposed transaction is valued at AU$21 million (about K53 billion).

Shareholders of Oil Search will own 38.5 per cent of the company, while Santos would possess 61.5 per cent.

PNG's Commerce and Industry Minister, Sam Basil, warned the merger will have economic consequences for the country.

“The planned merger between Oil Search and Santos can bite both ways,” Basil said.

“Oil Search is a PNG company publicly listed in the PNG National Stock Exchange first, and in the Australian stock exchange while Santos is not listed in Papua New Guinea,” he said.

“From our perspective, this is an outbound transaction.

“At the conclusion of this merger process, Oil Search ceases to exist.

“If the arrangement succeeds, shareholders will become shareholders of an Australian company which has no presence in the PNG capital market.

“The merged entity, which will be a foreign company, will be the biggest partner in the PNG LNG project with a more than 42.5 per cent stake.”

 

Reference: Luma, Dale. The National (10 September 2021). “Merger To Affect Stock Market”.



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