SA government threatens to intervene in Santos foreign takeover bid
Santos told the stock exchange on Monday that it had received a takeover offer from a consortium led by XRG, the international investment arm of the state-owned Abu Dhabi National Oil Company.
The consortium, which also includes US private equity firm Carlyle, intends to acquire all Santos shares at $8.89 per share — a nearly 28 per cent premium on its last closing price of $6.96.
The offer values the oil and gas company at about $28.8 billion.
The Santos board has indicated it intends to unanimously recommend shareholders vote in favour of the potential transaction in the absence of a better offer and subject to reaching a final agreement.
The agreement is also subject to approval from the Foreign Investment Review Board, Australian Securities and Investments Commission and the National Offshore Petroleum Titles Administrators, as well as other authorities in Papua New Guinea and the US.
Santos, founded in 1954 as South Australia and Northern Territory Oil Search, is South Australia's largest company and a top-20 company on the ASX.
It has oil and gas assets in the Cooper Basin in far north-eastern South Australia, Gladstone in Queensland, and across Western Australia and Papua New Guinea.
South Australian Premier Peter Malinauskas said XRG leadership briefed him about their plans on Monday morning.
"We welcome the opportunity to continue this positive engagement," he said in a statement.
XRG said it intended to maintain Santos's headquarters in Adelaide and its "brand, and operational footprint in Australia and key international operational hubs".
The Abu Dhabi company also said it intended to "work closely with the existing management team to accelerate growth and support local employment and the communities where Santos operates".
Energy and Mining Minister Tom Koutsantonis said having Santos headquartered in Adelaide was of "strategic and vital importance to the state".
"We're going to fight to keep it here," he said.
Mr Koutsantonis added that the takeover was "not a foregone conclusion".
He said the state government recently passed legislation that "requires our consent for change of licence ownership in the resources sector".
"We've got legislation which puts us at the table," he said.
"That means we're going to use that legislation, and if the deal is not in the interests of South Australians, the South Australian government will say so and act accordingly.
"If this deal is not in the interests of Australia … then the Commonwealth government will look at it and have a say.
Santos's share price soared 12.3 per cent this morning to $7.82.
But the rise was still well below the $8.89 bid price from the Abu Dhabi-backed consortium.
XRG said on Monday that its takeover bid did "not amount to a firm intention to make a binding offer and there can be no certainty that an offer will be made or any transaction will proceed".
The company said it wanted to "invest in Santos's 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".
It added that it would "ensure Santos remains a contributor to the transformation of energy systems" with investment in carbon capture and storage projects, low-carbon fuels and "the application of AI to drive efficiency and value across operations".
The Santos board has agreed to give the XRG consortium access to confidential information to conduct "confirmatory due diligence", subject to an agreement.
The company also intends to negotiate an exclusivity and confidentiality deed with XRG.
"The Santos board confirms that, subject to reaching agreement on acceptable terms of a binding SIA (scheme implementation agreement), it intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction," the company said.
"The potential transaction is fair and reasonable and in the best interest of Santos shareholders."
XRG's takeover bid follows two previous offers on March 21 and March 28 to take over the company at $8 and $8.60 a share respectively, according to Santos.
It also follows merger talks between Santos and Perth-based global energy giant Woodside in 2023. Those talks concluded in February 2024.
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