Aussie oil and gas giant Santos receives almost $30b takeover bid from consortium led by Abu Dhabi National Oil Company

Australia’s second largest oil and gas producer has received an almost $30b takeover offer from a group led by the Abu Dhabi National Oil Company (ADNOC) as it looks to expand its global gas business.

The $25b energy giant Santos told shareholders on Monday the group, which includes global investment firm Carlyle and is known as the XRG Consortium, received a proposal to acquire the Aussie company for US$5.76 (A$8.89) per share.

The bid marks a 28 per cent jump on Santos’ Friday closing share price of $6.69 and follows two previous offers at lower prices made in March.

Santos said it has provided the XRG Consortium with access to confidential information on the company to determine an offer.

The consortium said it wants Santos to enter into an exclusivity deed before further discussions and negotiations.

Santos’ board has recommended its shareholders vote in favour of the potential takeover.

The deal will need the approval from a litany of bodies including the Australia Securities and Investments Commission, the Foreign Investment Review Board and the National Offshore Petroleum Titles Administrator.

XRG Consortium has promised to keep Santos’ headquarters in Adelaide, support Aussie employment and the communities where it operates and bolster gas investment in Australia.

“The XRG-led consortium 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 consortium said in a statement.

“The proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business.”

E&P analyst Adam Martin said he had considered Santos as a target for mergers and acquisitions (M&A) for more than two years now.

“Since that time, there has been numerous media articles about potential M&A and an official approach from Woodside regarding a merger between the two companies,” Mr Martin said.

“With the passage of time, our conviction level on Santos being acquired has been reducing as the business has effectively been open to offers but there has been limited newsflow.

“That said, now does feel like an opportune time to acquire Santos with risks building on energy prices and Santos entering a free cash inflection phase with the completion of several major growth projects.”

ADNOC’s investment marks a shift for the UAE company as it embarks on becoming a leader in the gas and LNG sectors.

Santos’ share price has jumped 12.7 per cent on Monday since news of the bid came to light.

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