Santos Ltd. said Tuesday newly revealed approvals would delay the process for a consortium led by Abu Dhabi National Oil Co. PJSC (ADNOC) to progress its proposed takeover of the Australian company to a binding agreement.
Earlier Santos granted the consortium of sovereign investor Abu Dhabi Development Holding Co., Carlyle Group and ADNOC’s global investment arm XRG PJSC more time to conduct due diligence. The “process and exclusivity deed” signed June 27 between Santos and the group has been extended to August 22.
“The Process Deed governs the basis upon which the XRG consortium will have the opportunity to undertake due diligence and provides for the parties to negotiate in good faith, in parallel with the due diligence, a binding scheme implementation deed to implement the potential transaction”, Santos said in a statement June 27.
On Tuesday, Santos said, “While discussions and final confirmatory due diligence have continued to be collaborative, the parties are yet to reach agreement on acceptable terms of a binding SIA [scheme implementation agreement]. Further, Santos has this week been informed by the XRG consortium that even if the terms of an SIA were agreed and final due diligence was complete, it will still not be in a position to sign a binding SIA, as it is yet to obtain requisite final approvals which are required by the XRG consortium in order to enter into a binding transaction”.
“The XRG consortium has indicated that these approvals are expected to take four weeks to obtain (assuming an expedited process, potentially longer without) from the time that both due diligence is complete and the terms of an SIA are agreed in principle”, Santos said.
“Accordingly, Santos does not expect the parties to enter into a binding SIA by Friday 22 August 2025, when the exclusivity period under the Process Deed expires.
“Notwithstanding this development, discussions with the XRG Consortium remain ongoing”.
In its announcement last week of the process deed’s extension, Santos said the consortium’s diligence review so far had not found anything that would convince the consortium to withdraw the proposal.
Confirming the extension, XRG said separately last week, “There remains strong alignment between both parties on the strategic rationale for the potential transaction, and the process to date has been constructive and is ongoing”.
The parties announced a non-binding indicative proposal June 16, with Santos saying it intended to endorse to its shareholders the consortium’s cash purchase proposal of $5.76 per share.
The offer price had been raised from two confidential offers of $5.04 per share and later $5.42 per share, both made in March, Santos said when announcing the proposal in June.
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 at the time.
Earlier in June 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.
Early last year Santos and compatriot Woodside Energy Group Ltd. terminated their merger talks. According to Santos, the potential combination did not present sufficient benefits.
To contact the author, email jov.onsat@rigzone.com
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