ADNOC consortium offers $18.7 billion to takeover Australia's Santos

Santos, an Australian oil and natural gas company, said Monday that it would support a $18,7 billion bid by an international consortium led Abu Dhabi National Oil Company (ADNOC) to acquire the company.

ADNOC has, via its investment arm XRG in conjunction with Abu Dhabi Development Holding Company, Carlyle and Abu Dhabi Development Holding Company, offered $5.76 ($8.89 A$) per Santos Share, a 28% increase over the closing price of Friday for the Australian firm.

As oil prices rose to multi-week highs, Israel and Iran exchanged air strikes, causing concern that oil exports could be disrupted across the Middle East.

The consortium had previously made two proposals in March, at $5.04 per share and $5.42 per piece of stock that were not publicized.

In the absence of an improved proposal, "The Santos Board confirms, that subject to agreement on acceptable terms for a binding scheme-implementation agreement, it intends unanimously to recommend that Santos Shareholders approve the potential transaction."

The XRG consortium announced that it was negotiating with Santos to conduct due diligence on an exclusive basis, before formalising its offer. This would require at least 75% of Santos's investors to support the offer.

The proposed transaction aligns with XRG’s strategy and ambitions to build a global integrated gas and LNG business, it said in a press release.

Santos stated that the deal needed approval from Australia’s Foreign Investment Review Board, Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission and PNG Independent Consumer and Competition Commission.

MST Marquee's senior energy analyst Saul Kavonic stated that FIRB approval could "pose a significant risk for the deal", as Santos controls critical energy infrastructures in Australia.

Santos, the smaller Australian competitor of Woodside, had been in talks with Woodside last year to form a potential A$80 billion oil giant. Santos said it would seek other ways to boost its value.

Santos announced in February that its annual profit would fall by nearly 16 percent in 2024, and the company has cut its dividends by 41 percent.

Kavonic stated that while Santos was a target for takeover over the last several years, a competing bid is "very unlikely" as only ADNOC would be willing to pay a premium in order to achieve their global LNG ambitions.

(source: Reuters)