Arabian Post Staff -Dubai
Santos has granted a six‑week exclusive due‑diligence period to a consortium led by Abu Dhabi’s National Oil Company, signalling serious progress towards its A$36.5 billion takeover proposal.
The consortium, comprising ADNOC’s investment arm XRG, Abu Dhabi Development Holding Company and private equity investor Carlyle, has placed an all‑cash offer of A$8.89 per share—representing a roughly 28 per cent premium on Santos’s previous closing price. Santos’s board is prepared to endorse the deal, pending satisfactory outcomes from due diligence, no better competing bids and approval by an independent fairness expert.
Should the offer proceed, it would mark Australia’s largest-ever all‑cash corporate takeover and rank among the top three transactions nationally—holding an enterprise value near A$36.4 billion.
The acquisition targets Santos’s LNG assets, including Australia’s Gladstone and Darwin facilities, plus substantial interests in Papua New Guinea’s LNG project and the forthcoming Papua LNG development. XRG aims to build an integrated gas and LNG portfolio capable of delivering 20–25 million tonnes annually by 2035.
Adhering to regulatory requirements, the consortium has signed confidentiality agreements and secured exclusive negotiating rights for this due‑diligence phase.
Santos’s management is forecasting a binding scheme implementation agreement before enabling a shareholder vote needing at least 75 per cent support, as per Australian scheme‑of‑arrangement rules. Shareholder approval will depend on a legal and financial assessment of the offer’s fairness.
While the consortium has pledged to maintain Santos’s Adelaide headquarters, preserve local employment, and continue momentum on major projects like the Barossa LNG development and Moomba carbon‑capture initiative, significant regulatory scrutiny lies ahead.
National oversight will involve multiple bodies: Australia’s Foreign Investment Review Board, ACCC, ASIC, and National Offshore Petroleum Titles Administrator; Papua New Guinea’s Securities and Competition commissions; and the US Committee on Foreign Investment due to Santos’s cross-border interests.
Analysts caution that the central risk is FIRB rejection, given Santos’s control over critical gas infrastructure. Potential remedies, like spinning off assets, may invite legal and decommissioning complexities.
South Australian state officials, including Premier Peter Malinauskas and Energy Minister Tom Koutsantonis, have highlighted the importance of protecting domestic jobs, the company’s base, and energy security—leveraging recent legislative powers to oversee licence transfers.
The political backdrop complicates matters, with Treasurer Jim Chalmers in caretaker mode ahead of a potential election. His decision will pivot on FIRB advice and the national interest implications.
Santos has endured pressures in recent years, including a near‑16 per cent drop in annual profit and a 41 per cent dividend cut in 2024. It also abandoned merger negotiations with Woodside that would have created an A$80 billion energy entity.
The consortium’s revised offer follows an initial A$8.00 bid in March, raised to A$8.60 later that month, and now stands at A$8.89—reflecting sustained negotiations and valuation uplifts. Should the agreement proceed, final receipt of regulatory and shareholder clearances could extend into early 2026.
This transaction underscores ADNOC’s growing appetite for strategic LNG assets in the Asia‑Pacific region and exemplifies broader Middle Eastern investment trends in global energy infrastructure. The outcome will influence the balance of power in Australia’s evolving LNG market and set significant precedents for future foreign investment decisions.
Also published on Medium.
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