Australian energy company Santos saw its shares skyrocket by over 15% on Monday following a massive $18.7 billion takeover bid. The offer, a non-binding proposal, comes from a consortium spearheaded by XRG, the investment arm of Abu Dhabi National Oil Company (ADNOC). This marks the biggest single-day jump for Santos shares since April 2020, a significant indicator of market confidence in the deal.
The consortium, which also includes Abu Dhabi Development Holding Co and the Carlyle Group, is offering $5.76 (8.89 Australian dollars) per share. This represents a generous 27.73% premium compared to Santos’ closing price last Friday. Santos’ board has already indicated its intention to unanimously recommend the bid to shareholders, barring a superior offer.
This aggressive move by ADNOC isn’t entirely unexpected. XRG, with an enterprise value exceeding $80 billion, has been actively seeking acquisitions in the natural gas, chemicals, and lower-carbon energy sectors. For Santos, this represents a potential successful exit after several previous takeover attempts fell through, including rejected offers from Harbour Energy and a failed merger with Woodside Energy Group.
The acquisition would grant the consortium control of Santos’ significant Australian LNG operations, including Gladstone LNG and Darwin LNG, as well as its stakes in PNG LNG and the undeveloped Papua LNG. This positions the buyer to significantly expand its footprint in the global energy market.
The news has sent ripples through the Australian energy sector, highlighting the ongoing consolidation and strategic investments within the industry. The substantial premium offered underscores the perceived value of Santos’ assets and its strategic importance in the global energy landscape. The coming weeks will be crucial as shareholders consider the bid and the market anticipates further developments.
