eastern star pushes on despite unfair tag

http://www.theaustralian.com.au/business/news/eastern-star-pushes-on-despite-unfair-tag/story-e6frg906-1226146201310?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheAustralianBusinessMiningEnergy+%28The+Australian+%7C+Business+%7C+Mining+and+energy%29

EASTERN Star Gas will ask shareholders to back a takeover by Santos, even though it yesterday admitted that an independent expert criticised a key condition of the deal as unfair.
Eastern Star said independent investment and advisory group Grant Samuel deemed the proposed share-based acquisition of the company by Santos to be in its shareholders' best interests. However, it said Grant Samuel found that a part of the deal involving Santos paying cash to TRUenergy, the Australian unit of CLP Holdings, for its small stake as "neither fair nor reasonable".

In July, Eastern Star urged shareholders to accept Santos's offer of 0.06803 Santos shares for each of their shares, valuing them at 90c each at the time.

Santos also agreed to buy TRUenergy's 3.8 per cent interest in Eastern Star for 90c a share in cash and sell it 20 per cent of Eastern Star's permits for $284 million.

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Grant Samuel valued Eastern Star's shares at between 77c and $1 each, allowing for a control premium.

Due to a number of reasons, including a downturn in global equities markets and the corresponding fall in the Santos share price since the acquisition announcement, the implied value of Santos's share-based offer had fallen below 90c per Eastern Star share and less than what TRUenergy would get for its shares in the company, Eastern Star said.

"The independent expert has concluded that the disadvantages of the TRU acquisition to the non-associated shareholders outweigh the advantages and, accordingly, the TRU acquisition is neither fair nor reasonable having regard to the interests of the non-associated shareholders," Eastern Star said.

The company said it was still recommending the deal because the difference in payment to TRUenergy was not material and that component of the deal was an "integral part of the negotiated position between Eastern Star and Santos". Eastern Star shareholders are due to vote on the proposal on October 28.