Santos extends exclusive offer for ADNOC's $18.7 Billion, but profits decline

Santos, the Australian gas producer, agreed on Monday to extend exclusivity for an 18 billion dollar takeover bid by a group led Abu Dhabi National Oil Co. (ADNOC) and reported a 22% decline in profit that was better than expected.

The shares of the company rose 1% at the opening of trading on September 19, after the due diligence period was extended to allow the consortium led ADNOC’s investment arm XRG to have more time to obtain the required internal approvals prior to making a takeover offer.

Santos stated that the consortium "again confirmed" on Sunday it had not found anything during its due diligence which would have led it to withdraw their indicative proposal.

Analysts believe that the stock price will likely rise on Monday as confirmation comes through that the deal is still moving forward despite delays.

The company's first-half earnings fell from $654 to $508 due to lower realized prices for oil and liquefied gas (LNG). Visible Alpha's consensus forecast was 3% higher than the actual result.

Santos' shares rose in early trading to A$7.81 each after the announcements. However, they are still more than A$1 below the consortium’s proposed offer of A$8.89 per share. The increase in Santos shares was greater than the 0.75% gain of the S&P/ASX200.

Santos warned last week that the consortium, including Abu Dhabi Development Holding Company and Carlyle private equity, would have to wait at least one month before finalising their offer.

Last Friday, the deadline for exclusive talks between Santos & the consortium expired. Santos may engage in talks with a bidder if a better offer is made. However, it is prohibited from engaging with parties that match the XRG's offer.

Santos has assets in Australia, Papua New Guinea and the U.S., so regulators must approve this offer.

(source: Reuters)