XRG-Led Consortium Makes Cash Offer for Santos
Santos shares surged over 15% on Monday following an $18.7 billion takeover bid from an ADNOC-led international consortium. The group includes Abu Dhabi National Oil Company’s investment arm XRG, Abu Dhabi Development Holding Co, and Carlyle Group. The consortium offered a cash price of $5.76 (A$8.89) per Santos share, a 28% premium on Friday’s close. Santos’ board said it intends to “unanimously recommend” shareholders vote for the transaction in the absence of a superior proposal. This proposed deal marks the biggest intraday share price jump for Santos since April 2020, according to LSEG data.
Historic All-Cash Deal in Australian Market
The takeover values Santos at an enterprise value of A$36.4 billion, including debt, according to FactSet data. This would make it the largest all-cash corporate buyout in Australian history and the third largest takeover overall. Santos said on Monday it supports the offer, which aligns with ADNOC’s ambition to grow its global gas business. XRG said the “proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business.”
Consortium Targets Santos’ LNG Operations
If successful, the deal would give the group control of Gladstone LNG and Darwin LNG operations in Australia. The acquisition also includes stakes in PNG LNG and the undeveloped Papua LNG, considered Santos’ most valuable assets. Santos is also advancing its Alaskan oil project, Pikka, which is expected to begin production by mid-2026. XRG aims to build a gas and LNG portfolio producing 20–25 million metric tons annually by 2035. Santos sold 5.08 million metric tons of LNG in 2024, over 60% of which came from Papua New Guinea.
Consortium Targets Santos’ LNG Operations
Previous Offers and Failed Attempts
The offer follows two earlier confidential bids in March, priced at $5.04 and $5.42 per share. Santos previously rejected a $10.8 billion offer from Harbour Energy in 2018 due to valuation concerns. Last year’s talks with Woodside Energy to create an A$80 billion gas giant also collapsed. Santos cited valuation disagreements and has since sought other means to improve its market position.
ADNOC’s Global Expansion Strategy
XRG, formed in November, acquired a gas block in Turkmenistan and holds LNG interests in Mozambique. Kaushal Ramesh of Rystad Energy said, “For ADNOC, this is in line with their aggressive growth plans.” Ramesh added, “What ADNOC really wants is the LNG assets, since they are inside the Asia Pacific basin.”
Regulatory Approvals Could Delay Transaction
The takeover requires several approvals, including from Australia’s FIRB and Papua New Guinea authorities. MST Marquee analyst Saul Kavonic said FIRB approval “may be a major risk to the deal.” E&P Capital flagged concerns with approvals from offshore regulators in Australia and Papua New Guinea. Santos controls vital energy infrastructure, raising the risk of regulatory pushback on national interest grounds. XRG committed to keeping Santos’ headquarters in South Australia to address domestic regulatory concerns. Spin-offs of domestic assets could be complicated by decommissioning obligations, analysts warned.
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Market Reaction and Share Performance
It shares rose to A$7.86 in early Monday trading before settling at A$7.81 by mid-session. Despite the offer price being higher, market uncertainty over regulatory clearance kept shares trading below the bid. The offer emerged as oil prices hit multi-week highs amid Middle East tensions involving Israel and Iran. Analysts noted the geopolitical backdrop may influence energy investment strategies across the region.
Unlikely Competing Offer in Sight
Kavonic said, “A competing bid is very unlikely as only ADNOC may be willing to pay such a premium.” He added the premium reflects ADNOC’s global LNG expansion goals and its long-term investment strategy. it said its underlying annual profit fell 16% in 2024 and cut its dividend by 41% earlier this year. Despite this, interest in it remains high due to its strategic LNG and energy assets in Asia-Pacific.
Due Diligence and Shareholder Vote Timeline
The consortium is negotiating exclusive due diligence with its before formalising the agreement. Any transaction will need support from 75% of as share holders under the scheme of arrangement process.its reiterated, “Subject to reaching agreement on acceptable terms of a binding scheme implementation agreement,” it supports the deal. The proposed transaction remains subject to negotiations, regulatory clearance, and final shareholder approval.
