Australian liquefied natural gas (LNG) supplier Santos Limited announced on Monday that it received a non-binding takeover proposal from a consortium led by ADNOC’s XRG. The proposal is for the acquisition of all of the ordinary shares on issue in Santos for a cash offer price of $18.7 billion or $5.76 per share.
The offer made by the XRG Consortium, which includes Abu Dhabi Development Holding Company (ADQ) and Carlyle, was a 28 percent premium to the Australian company’s close on Friday. The deal gives Santos an enterprise value of A$36.4 billion, which would make it the largest all-cash corporate buyout in Australian history, according to FactSet data. It would also be the third-largest takeover ever in Australia, the data showed.
Following the announcement, Santos shares gained 10.92 percent to A$7.72 as of 7:36 GMT.
XRG seeks 20-25 million metric tons of LNG capacity by 2035
XRG’s deal with Santos comes at a time when oil prices are reaching multi-week highs as tensions in the Middle East arise, sparking concerns that oil exports from the Middle East could be widely disrupted.
With this deal, the XRG consortium would gain access to two Australian liquefied natural gas operations, as well as stakes in PNG LNG and the undeveloped Papua LNG. The company is also developing an oil project in Alaska, due to start producing in mid-2026.
XRG said in June it aims to build a gas and LNG business with a capacity between 20 million and 25 million metric tons a year by 2035. Last year, Santos sold 5.08 million tons of LNG, with more than 60 percent of that coming from Papua New Guinea.
XRG to accelerate Santos’ growth
In a statement, XRG said the consortium brings extensive sector experience, long-term vision and investment capacity, and aims to ensure that Santos continues to thrive as a business.
Subject to implementation of the proposal, the XRG-led consortium intends to maintain Santos’ headquarters in Adelaide, brand, and operational footprint in Australia and key international operating hubs. It aims to work closely with the existing management team to accelerate growth and support local employment and the communities where Santos operates.
Furthermore, it seeks to invest in Santos’ growth and further development of its gas and LNG-focused business, which will provide reliable and affordable energy and low-carbon solutions to customers in Australia, the Asia Pacific and beyond. This will reinforce Australia’s position as a responsible energy partner and contributor to domestic and regional energy security.
Finally, it aims to ensure Santos remains a contributor to the transformation of energy systems and continues to make future-facing investments in Santos’ carbon capture and storage projects, low carbon fuels, other decarbonization initiatives and the application of AI to drive efficiency and value across operations.
Read: UAE, Saudi Arabia venture into the U.S. LNG space
XRG submits two confidential proposals
XRG’s latest proposal followed two confidential, non-binding and indicative proposals from the consortium to acquire 100 percent of Santos shares on March 21 for $5.04 in cash per share and on March 28, for $5.42 in cash per share.
After careful consideration, the Santos Board has determined that it is in the best interests of Santos Shareholders to provide the XRG Consortium with access to confidential information to conduct confirmatory due diligence and negotiate the terms and conditions of an SIA, subject to reaching agreement with the XRG Consortium on the terms on which access to due diligence will be provided.
The company also revealed that the XRG Consortium has indicated that it requires Santos to enter into a Process and Exclusivity Deed before it progresses to undertaking confirmatory due diligence and negotiating the terms of the SIA. Santos intends to negotiate the terms of the Process and Exclusivity Deed and an associated Confidentiality Deed with the XRG Consortium.
The Santos Board confirmed that it intends to unanimously recommend that Santos Shareholders vote in favor of the Potential Transaction, in the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the Potential Transaction is fair and reasonable and in the best interests of Santos Shareholders.
