By Perry Williams

Oil Search will unanimously recommend a sweetened $21bn merger offer from rival Santos, after rejecting a first buyout deal unveiled two weeks ago, with the combined business catapulting into the world’s 20 largest energy companies.

The improved deal will see Oil Search shareholders own 38.5 per cent of the merged company with Santos the 61.5 per cent balance, a boost to the previous 37 per cent to 63 per cent weighting between the two.

It sets the scene for a dramatic recasting of Australia’s oil and gas landscape with the merged company to topple Woodside Petroleum as the nation’s kingpin producer, handing it extra clout and making it a top 20 ASX company and beefed up global energy player.

The deal would also make Santos boss Kevin Gallagher the most powerful energy executive in the country, just months after the Scottish executive was touted for the top job at Woodside before being convinced to stay put with a $6m carrot to deliver major growth projects. Woodside is also being tipped for deal action with a potential BHP petroleum tie-up looming.

Several institutional shareholders backed the merger deal.

“Our view is there’s a lot of synergies to be had and the two companies combined are a lot better than being apart, so we welcome the transaction,” said Matt Haupt from Wilson Asset Management which holds shares in both Santos and Oil Search.

Read more on The Australian.