My take on this deal .David Knox stated that a full takeover was...

My take on this deal .

David Knox stated that a full takeover was not an option. I'm assuming that he meant that the management of ESG were not interested in a full takeover ( although I'm sure it would've been discussed ).Given that the ESG management control a significant amount of stock , this would've been their call.I say this because my feeling is that so far ESG management has truly been acting in the best interests of the shareholders by working to increase value in the company.

Having said that , I'm sure they realised that it was time to team up with someone if ESG is to survive and grow. To them , it would seem that STO would probably be the "friendliest" partner. They have adjacent acreage ( lots of synergies there ) and ESG has the most advanced technology for NSW coal. The Cooper basin is in decline and STO cleary wants to be a big player in the NSW electricity market so it's all good for STO.

Santos knows how good this resource is based on their own findings and they want to be part of the deal. If this is the only way they could get in , then it's better than not getting in at all. In reference to the failed QGC deal , David Knox mentioned that the previous management had let that go. Easy to blame the other guys , I know but he also said they had learnt from that experience. He also mentions 'collaboration' several times and suggests that is his style. I might add that even though they missed out on the QGC deal , they stil made a handy profit out of their investment.

I'm sure ESG management realise that they may not be able to survive forever , but by doing this friendly deal with STO , it buys them time to add a lot more value to the company for the shareholders.