Santos has granted exclusive due diligence access for six weeks to the consortium led by Abu Dhabi’s ADNOC that has made an $18.7 billion non-binding takeover bid for the Australian energy giant.
Santos, which earlier this month received – and plans to accept – the offer, has now entered into a process and exclusivity deed with XRG, a subsidiary of Abu Dhabi National Oil Company and lead investor of a consortium including Abu Dhabi Development Holding Company and Carlyle, the Australian gas giant said on Friday.
The XRG Consortium has submitted a non-binding indicative proposal to acquire 100% of the issued shares of Santos for US$5.76 (A$8.89) per share in cash. This would mean an US$18.7 billion deal, which would be the biggest cash transaction in Australia in recent history.
The XRG Consortium has also agreed to a confidentiality agreement with Santos, the Australian company said.
“Santos notes that there is no certainty that the XRG Consortium will enter into a binding SID or that a Potential Transaction will proceed,” it added.
Santos operates two large LNG facilities in Australia: Darwin LNG and Gladstone LNG. Santos is also the majority shareholders in the PNG LNG project in Paua New Guinea, after taking over Oil Search back in 2021. PNG LNG is considered one of the lowest-cost LNG projects globally and, according to Reuters, is the most attractive of its assets. The company also recently got the green light on another gas project, this time an onshore coal seam project, which will supply the local market and which will cost $2.3 billion to develop.
While the Australian company’s leadership may be in favor of the deal, regulators may have misgivings, which makes the future of the deal uncertain. Santos controls critical energy infrastructure in Australia, MST Marquee senior energy analyst Saul Kavonic said, as quoted by Reuters, which could make regulatory approval of its takeover by a foreign company a challenge.
By Tsvetana Paraskova for Oilprice.com
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