A consortium led by ADNOC’s XRG has withdrawn its offer and will not proceed with its offer to purchase Australian operator Santos. The group made an $18.7 billion nonbinding indicative proposal to acquire Santos in an all-cash deal valued at $5.76 per share in June — a near 30% premium to the operator’s stock price at the time of the offer.
With Santos, the consortium looked to gain a foothold in the existing Barossa and Papua LNG projects, a handful of LNG projects under development, and the company’s extensive natural gas operations in the Queensland region onshore and offshore Western Australia.
XRG said the consortium maintains a positive view of the Santos business, however, following months of due diligence and evaluation. Considering commercial factors and the terms of the “scheme implementation agreement” required by the Santos board of directors, the consortium decided to abandon the proposed deal.
While the bid for Santos will not go through, XRG did say the exercise “reinforced confidence” in Australia’s energy and investment environment.
The bid from the consortium, made up of XRG, Abu Dhabi Development Holding Company (ADQ) and global investment firm Carlyle, had the support of the Santos board, which said it would unanimously recommend to company shareholders in the absence of a better offer.
XRG said the consortium was prepared to undertake new long-term commitments to Australian energy production that would deliver “meaningful benefits” to its domestic gas market.
This is the third failed attempt to acquire Santos in the past 7 years. In 2018, the Australian producer rejected a $10.8 billion offer from private equity-backed Harbour Energy, and just last year the producer walked away from merger discussions with its larger Australian rival Woodside Energy.