ABU DHABI: Australia’s second-largest gas producer, Santos, has announced its intention to endorse an all-cash takeover offer valued at $18.7 billion from an international consortium led by Abu Dhabi’s National Oil Company (ADNOC).
The consortium, which includes ADNOC’s investment arm XRG, Abu Dhabi Development Holding Company (ADQ), and private equity firm Carlyle, proposes a bid of A$8.89 per share, representing a 28 per cent premium over Santos’ recent closing price.
The acquisition, with an enterprise value of A$36.4 billion when factoring in net debt, is poised to become the largest all-cash corporate buyout in Australian history and ranks as the third largest takeover overall in the country.
It aligns with ADNOC’s strategic ambition to expand a global gas and liquefied natural gas (LNG) business, particularly within the Asia-Pacific region—the area expected to drive future LNG demand.
The consortium’s offer grants it control over key Santos assets, including the Gladstone and Darwin LNG operations in Australia, as well as significant stakes in Papua New Guinea’s LNG projects, which are highly valued. Santos also holds a promising oil development project in Alaska, further enhancing the consortium’s portfolio.
Potential regulatory hurdles
Despite initial optimism, Santos shares have traded below the offer price, reflecting investor concerns about potential regulatory hurdles in Australia and Papua New Guinea. Regulatory approval from multiple authorities, including Australia’s Foreign Investment Review Board and Papua New Guinea’s Securities Commission, is mandatory for the deal to proceed.
The proposed takeover represents a significant shift in the Australian energy sector’s landscape, particularly following previous unsuccessful merger talks between Santos and another domestic giant, Woodside. It underscores the growing international interest in Australian energy assets and the strategic importance of LNG in the evolving global energy market.
Santos has long been a takeover target, having rejected a $10.8 billion offer from private equity-backed Harbour Energy in 2018.
