Abu Dhabi’s ADNOC, through its investment arm XRG, along with Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle, has made the largest all-cash corporate buyout in Australian history to acquire all shares of Santos, the country’s second-largest gas and energy company.
After rejecting two previous offers from the XRG consortium, Santos stated that it intended to support the new, all-cash US$18.7 billion non-binding indicative proposal.
ADNOC makes largest Australian buyout deal
The new XRG offer is for US$5.76 (A$8.89) per share was a 28 per cent premium to Santos’ closing price on Friday. Taking into account net debt, the deal gives Santos an enterprise value of A$36.4 billion. FactSet data said if the deal happens, it would make XRG’s acquisition the largest all-cash corporate buyout in Australian history.
According to the data, it would be the third-largest takeover in Australian history. The largest was Sydney Aviation Alliance’s 100 per cent acquisition of Sydney Airport in 2022 valued at approximately AU$32 billion (US$20.77 billion).
The earlier proposals from the consortium were for US$5.04 and US$5.42 per share in March this year.
ADNOC launched XRG, an investment company focusing on lower-carbon energy and chemicals, in November last year, valued at more than US$80 billion.
Santos, the second largest energy company in Australia after Woodside Energy, has been a takeover target in the past, having rejected a US$10.8 billion offer from private equity-backed Harbour Energy in 2018. It was also in talks with Woodside before the negotiations broke down.
In a statement, the XRG-led consortium said it “aims to build on Santos’ strong and longstanding legacy as a trusted and reliable energy producer, unlocking additional gas supply for Santos’ customers, and strengthening domestic and international energy security.
“The proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business.”
The XRG consortium stated that it was negotiating to conduct due diligence with Santos on an exclusive basis before formalising the offer, which would require at least 75 per cent support from Santos’ investors.
The Santos Board confirmed that if an agreement is reached on acceptable terms of a binding scheme implementation agreement (SIA), it intends to recommend the proposal to its shareholders.
In a disclosure with ASX (Australian Securities Exchange, Santos said: “The Santos Board confirms that, subject to reaching agreement on acceptable terms of a binding scheme implementation agreement, it intends to unanimously recommend that Santos Shareholders vote in favour of the potential transaction, in the absence of a superior proposal.”
Santos shares have risen more than 11 per cent to A$7.72 on Monday morning following the announcement. It reached a day-high of A$8.02 (up 15.2 per cent), but retreated slightly.
Santos’s acquisition will give the XRG-led consortium control of two Australian liquefied natural gas operations – Gladstone LNG on the east coast and Darwin LNG in the north, as well as stakes in PNG LNG and the undeveloped Papua LNG. The company is also developing an oil project in Alaska, Pikka, which is due to start producing in mid-2026.
Santos sold 5.08 million tons of LNG last year, with more than 60 per cent of that coming from Papua New Guinea.
Due to Santos’ immense value and importance to the domestic market, as well as its involvement in Papua New Guinea, experts anticipate that regulatory approvals will be complex and lengthy.
Santos said the deal required approval from Australia’s Foreign Investment Review Board (FIRB), Australian Securities and Investments Commission (ASIC), National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission and Committee on Foreign Investment in the United States (CIFIUS).
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