Santos Shares Jump Over 15% Following $18.7 Billion Takeover Offer from ADNOC-Led Consortium
Shares of Australian oil and gas producer Santos Ltd rose more than 15% on Monday after receiving a non-binding takeover proposal valued at $18.7 billion from a consortium led by a unit of Abu Dhabi’s National Oil Company (ADNOC).
The offer marks a major move by the Middle Eastern energy giant to expand its presence in the global liquefied natural gas (LNG) sector.
The consortium, which includes Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle Group, offered AU$8.89 (US$5.76) per Santos share—representing a 28% premium to Santos’ closing price on Friday. It is the largest intraday share price gain for Santos since April 2020, according to LSEG data.
In a statement, Santos said it had received earlier indicative proposals from the same consortium in March and that it intends to “unanimously recommend” the latest offer to shareholders, “in the absence of a superior proposal.”
The bid comes amid heightened geopolitical tension and volatile energy markets, particularly following recent military strikes between Israel and Iran. Oil prices have reached multi-week highs amid concerns over potential supply disruptions, creating an opportune moment for strategic energy investments.
The acquisition would give the ADNOC-led group access to Santos’ diverse LNG portfolio, which includes major operations in Australia such as Gladstone LNG and Darwin LNG, as well as stakes in Papua New Guinea’s PNG LNG and the undeveloped Papua LNG project. Santos also holds assets in Alaska and Timor-Leste.
ADNOC’s investment arm, XRG, said the offer aligns with its strategy to build an integrated global gas and LNG business. The proposed transaction is one of ADNOC’s largest international acquisition efforts to date, reflecting its growing ambitions in the energy transition era.
Despite the board’s support, the deal is subject to multiple regulatory approvals, including from Australia’s Foreign Investment Review Board (FIRB), PNG’s Securities Commission, and US foreign investment authorities. Analysts warn that regulatory clearance could be a significant hurdle due to Santos’ role in Australia’s domestic energy infrastructure.
Saul Kavonic, senior energy analyst at MST Marquee, noted:
“FIRB approval may be a major risk to the deal, considering Santos controls critical energy infrastructure.”
His firm downgraded Santos to “neutral” with a revised target price of AU$7.90.
Santos has long been viewed as a potential acquisition target. Previous takeover talks with US-based Harbour Energy were rejected, and merger discussions with Australian rival Woodside Energy failed to reach agreement. Meanwhile, investor pressure has grown in recent years over lagging returns and concerns around capital allocation.
CEO Kevin Gallagher, who has led a strategy to expand production by 50% by the decade’s end, has faced mixed investor sentiment. However, analysts credit him for securing a substantial premium offer.
“Gallagher has found his escape parachute, and it’s made of gold,” Kavonic said.
The consortium is seeking to conduct exclusive due diligence before finalizing a binding agreement. The proposed deal would require approval by at least 75% of Santos shareholders to proceed.
While the offer underscores ongoing global interest in Australia’s LNG sector, analysts consider it unlikely that a competing bid will emerge, given the premium offered and the strategic value ADNOC places on entering the LNG market.
CNBC, Reuters, the Financial Times, and Bloomberg contributed to this report.
