ADNOC-led Bid for Santos Collapses over Unresolved Commercial Terms

Shares in Santos plunged by up to 13.6% as the Abu Dhabi National Oil Company-backed XRG consortium formally withdrew its A$36.4 billion takeover offer, stating it could not reach agreement with Santos on critical commercial terms.

The consortium, which includes ADQ and Carlyle alongside XRG, had proposed A$8.89 per share in June, equivalent to US$5.76 at the time. Santos had adjusted that for a dividend and told XRG on Monday that it was prepared to accept US$5.626 per share.

This marks the third unsuccessful major offer for Santos over seven years, including a rejected bid from Harbour Energy in 2018 and abandoned merger talks with Woodside Energy. Analysts warn that repeated deal failures erode investor confidence in the company’s ability to seal a large-scale acquisition.

Investor concern was immediately reflected in the market. Santos shares dropped to A$6.61 in early trading, their lowest level since June 10, as the premium embedded in the bid evaporated. The benchmark S&P/ASX200 index was marginally down.

Analysts and banks responded by downgrading the stock. Jarden cut its rating from “overweight” to “underweight”, lowering its 12-month target from A$8.40 to A$7.05 per share.

Santos leadership emphasised its strong project pipeline, pointing to the Barossa gas project in northern Australia and the Pikka oil venture in Alaska as key future growth drivers. Company chair Keith Spence reiterated that Santos has a clear strategy to generate cash, reward shareholders, reinvest in infrastructure and grow production while maintaining safety and reliability.

XRG stated that a “combination of factors, when considered collectively, have impacted the Consortium’s assessment of its indicative offer”, including inability to agree on terms under the Scheme Implementation Agreement. Among sticking points was the demand that the consortium assume certain regulatory and tax-risk obligations, which XRG considered unacceptable.