Santos said it was prepared to approve an ADNOC bid of $18,7 billion before the deal collapsed

Santos, the Australian gas producer, said that it would be willing to accept the ADNOC consortium's bid of $18,7 billion for the company if the international group did not withdraw the offer because commercial terms could no longer be agreed.

Santos, in a Thursday morning statement, said that it had told the XRG group on Monday that it would be willing to close a deal for $5.626 per share.

Original offer made in June at $5.76 per share, but adjusted to reflect Santos’s recent dividend payment.

XRG retracted the offer on Tuesday and stated that "a variety of factors when taken together have impacted the Consortium’s assessment of the indicative offer."

FactSet data shows that, after subtracting the net debt, Santos would have a value of A$36,4 billion ($24,2 billion). This would make it the largest cash-only corporate buyout ever in Australian history.

Santos will be under pressure now that the deal has failed, as it was the third time in seven years that a buyer had declined to proceed with the offer.

Santos rejected an $10.8 billion bid from Harbour Energy, a private equity-backed company in 2018, and walked out of talks with Woodside Energy, its larger Australian rival. The two companies were discussing a potential A$80 billion oil giant.

Santos has a strong strategy, a solid leadership team and many high-quality opportunities for growth across its global portfolio. Santos Chairman Keith Spence stated that the board was confident that these strengths would deliver long-term shareholder value.

Jarden, an investment bank, downgraded Santos's rating from overweight to underweight on Thursday following XRG’s exit. Jarden reduces Santos's 12-month target price by 16%, from A$8.40 per share to A$7.05

Nik Burns, Jarden analyst, said: "We expect Santos' shareholders to be hurt by the sudden withdrawal from the proposed takeover and will ask questions about the negotiation tactics of the last few weeks."

We expect share prices to fall in response to these news. However, we also expect investors to profit from any significant sell-offs if they feel the stock is oversold. $1 = 1.5035 Australian Dollars (Reporting and Editing by Scott Murdoch)

(source: Reuters)