ADNOC-led consortium makes $18.7bn takeover bid for Santos

Australian energy major Santos has received a non-binding takeover proposal from a consortium led by the Abu Dhabi National Oil Company (ADNOC).

The takeover offer by a consortium of ADNOC subsidiary XRG, Abu Dhabi Development Holding Company, and Carlyle received early endorsement from the Santos board.

The proposal is for the acquisition of all the ordinary shares on issue in Santos for a cash offer price of A$8.89 ($5.76) per share. The price is a 28% premium to the last closing price of A$6.96.

The proposal follows two confidential proposals from the consortium to acquire 100% of Santos Shares on March 21 for $5.04 per share and on March 28 for $5.42 per share.

At $5.76 a share, the latest offer values Santos at $18.7bn, based on an exchange rate of 0.6480 A$ for $1 on June 13. With debt included, the total value of the company stands at $23.7bn. If the transaction goes through, it will be the largest all-cash takeover in ASX history, according to FactSet data.

The proposal is subject to the satisfactory completion of confirmatory due diligence by the consortium and the negotiation and execution of an agreed scheme implementation agreement with Santos on customary terms and conditions.

If the companies reach an agreement over a scheme implementation agreement, the board will unanimously recommend that shareholders vote in favour of the offer, unless a superior proposal is made.

Right after the news was made public, the South Australian government threatened to intervene if the takeover was “not in the interests of South Australians”.

Energy and Mining Minister Tom Koutsantonis said that he would fight to keep Santos’ headquarters in Adelaide, which was of “strategic and vital importance to the state”.