Santos Ltd. said Monday it intends to endorse to shareholders its potential acquisition by a consortium led by Abu Dhabi National Oil Co. (ADNOC).
The Australian oil and gas explorer and producer said it had received a non-binding indicative proposal from ADNOC’s global investment arm XRG PJSC, sovereign wealth fund Abu Dhabi Development Holding Co. (ADQ) and Carlyle Group. This comes about a year after Santos and compatriot Woodside Energy Group Ltd. ended merger talks.
“The proposal is for the acquisition of all of the ordinary shares on issue in Santos for a cash offer price of US$5.76 per Santos share”, which would be adjusted for dividends paid before a final proposal comes into force, Santos said in an online statement. It received the proposal Friday.
The price had been increased from two confidential offers of $5.04 per share and later $5.42 per share in March, Santos revealed.
As of the close of Australian stock trading Friday, the proposal of $5.76 per share represented a 28 percent premium to Santos’ last closing price of AUD 6.96 ($4.53), 30 percent premium to Santos’ one-week volume weighted average price (VWAP) of AUD 6.82, 34 percent premium to the one-month VWAP of AUD 6.61, 44 percent premium to the three-month VWAP of AUD 6.19 and 39 percent premium to the six-month VWAP of AUD 6.40, Santos noted.
Santos rose 10.92 percent to AUD 7.72 on the Australian Securities Exchange on Monday.
The consortium intends to grow Santos’ natural gas and liquefied natural gas (LNG) business to support demand in Australia, the Asia-Pacific and beyond, XRG said in a separate press release.
Earlier this month XRG announced a goal of building a top-five integrated gas and LNG business with a capacity of 20-25 million metric tons a year by 2035.
Santos operates in Australia, Papua New Guinea, Timor-Leste and the United States.
“The Indicative Proposal is subject to the satisfactory completion of confirmatory due diligence by the XRG Consortium and the negotiation and execution of an agreed scheme implementation agreement (SIA) with Santos on customary terms and conditions”, Santos said. Santos agreed to allow the consortium to access confidential information.
“Implementation of the scheme under the SIA would be conditional on (among other things) customary approval from the Foreign Investment Review Board, Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission and Committee on Foreign Investment in the United States”, it added.
“The Santos Board confirms that, subject to reaching agreement on acceptable terms of a binding SIA, it intends to unanimously recommend that Santos Shareholders vote in favor of the Potential Transaction, in the absence of a superior proposal” and subject to independent expert opinion, Santos said.
Santos said Thursday it has retained a Fitch Ratings of BBB with a stable outlook.
Santos has tapped Goldman Sachs and JB North & Co. as financial advisers. Rothschild & Co. is independent board adviser. Herbert Smith Freehills Kramer is acting as legal adviser.
The XRG consortium has J.P. Morgan as financial adviser and Linklaters and Allens as legal advisers.
In February 2024 Santos and Woodside terminated negotiations on a potential combination. “Following an initial exchange of information, sufficient combination benefits were not identified to support a merger that would be in the best interests of Santos shareholders”, Santos said in a statement then.
To contact the author, email jov.onsat@rigzone.com
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