Australia’s second-largest gas producer, Santos, announced on Monday its intention to support an all-cash takeover offer worth USD 18.7 billion from an international consortium led by Abu Dhabi National Oil Company (ADNOC), which aims to expand its global gas portfolio.
Santos shares surged by 11% by the close of trading on Monday, although this remained well below the 28% premium offered based on the previous closing price. Analysts noted this disparity may reflect concerns over whether the proposal will gain regulatory approval in Australia.
ADNOC’s investment arm, XRG, together with Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle, proposed a bid of USD 5.76 (AUD 8.89) per Santos share. The company’s stock was last traded at AUD 7.72.
Factoring in net debt, the proposal values Santos at an enterprise value of AUD 36.4 billion, which would represent the largest all-cash corporate acquisition in Australian history, according to data from FactSet.
“This aligns with ADNOC’s ambitious growth strategy,” said Kaushal Ramesh, Vice President of Gas and LNG Research at Rystad Energy.
The takeover bid surfaced as oil prices climbed to multi-week highs due to escalating tensions between Israel and Iran, raising fears of potential disruptions to oil exports from the Middle East.
With Santos under its umbrella, the XRG-led group would acquire control of two Australian liquefied natural gas operations — Gladstone LNG and Darwin LNG — along with interests in PNG LNG and the undeveloped Papua LNG. Santos’ assets in Papua New Guinea are regarded as its most valuable holdings.
