ADNOC consortium withdraws bid of $18.7 Billion for Australia's Santos
After months of disagreements over valuation, Abu Dhabi National Oil Company has pulled its $18,7 billion bid to purchase Australian gas producer Santos. ADNOC may be slowing down its aggressive expansion overseas as it looks to invest the booming oil revenue in the country. This also shows the challenges foreign companies face when trying buy assets in Australia. ADNOC's overseas division XRG, Abu Dhabi sovereign fund ADQ, and private equity firm Carlyle's bid for Santos was the third unsuccessful bid to purchase Santos.
Santos rejected an offer of $10.8 billion from Harbour Energy, a private equity-backed company in 2018, and left talks with Woodside Energy, a larger Australian competitor last year for a potential A$80 billion oil giant.
Saul Kavonic, senior energy analyst at MST Marquee, said: "The market is going to ask questions about Santos valuation following this. XRG had a lower price sensitivity than most but still failed to make the deal work."
Santos and the Australian government did not immediately respond to comments made outside business hours.
XRG AND PARTNERS ARE FOCUSED UPON SHAREHOLDER WORTH
The statement released after the Australian financial markets closed said: "While disappointed that we were unable to proceed, XRG and its consortium partners are responsible, disciplined, investors who have a clear focus of creating value for our shareholder and driving long-term development."
Santos shares closed at A$7.65 on Wednesday, far below the consortium’s indicative $5.76 offer per share, which had been equivalent to A$8.89 when the bid was received in June.
Analysts interpreted the consistent trading of the shares below the offer price as an indication from investors that this deal might not proceed.
Santos said in June that it rejected two previous offers made by the consortium at $5.04 per share and $5.42 for each share in March.
According to FactSet, if the net debt was taken into consideration, the deal would give Santos a value of A$36,4 billion ($24,30 billion), making it the largest cash-only corporate buyout ever in Australian history.
The consortium extended its due diligence to Santos, and had until Friday to make a formal bid.
Opportunities to Sell Down Some Assets
Kaushal Ramesh is vice president of gas and LNG research for Rystad Energy. He said: "Despite this result, we believe Santos APAC-facing assets LNG continue to have geostrategic importance in this turbulent period."
MST Marquee Kavonic has echoed this.
Kavonic stated that it is unclear whether this will happen under the current leadership.
He said that ADNOC could still pursue asset-level deals which are simpler and less controversial.
The ambitions of ADNOC have not changed. "Santos won't be the big LNG debut for ADNOC."
(source: Reuters)
