Santos shares tipped to rise as takeover offers loom

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A brokerage firm has predicted Santos shares to rise as it says the company is eyed for potential takeover.

Invast has predicted Santos shares to head toward $7. The brokerage firm says it Takeover Targets thematic portfolio included Santos as its number one stock.

“While all other stocks in the portfolio are weighted 5%, Santos is weighted 10% in the Takeover Targets Australia thematic portfolio, which was launched in August, in anticipation of the events of last week,” said Gavin White, Chairman of the Investment Committee with Invast Australia.

White said Santos was a takeover target due to its financial woes.

"Santos will now likely trade closer to the $7.00 mark. Scepter Partners is a big fund backed by the Brunei royal family along with other backers from Dubai. They seem to be just trying their luck to pick up quality assets at a bargain price from a company burdened with debt. Santos shareholders aren’t likely to go for it,” White said.

White predicted there would be another offer, which would be likely to "coax any other potential bidders from the sidelines".

"Given the expectation in the run up in Santos’s price, this will support the performance of our Takeover Targets portfolio, which has returned 12.8% over the last month*. The portfolio includes a selection of Australian stocks which have either been subject to takeover speculation or are likely to be a desirable target,” he said.