Abu Dhabi state oil firm makes US$18.7 billion bid for Australia's Santos
[SYDNEY] Abu Dhabi's state-owned oil company is leading a takeover bid for Australian energy group Santos, valuing it at US$18.7 billion, the two firms said on Monday (Jun 16).
Santos' board said it plans to unanimously recommend the Abu Dhabi National Oil Company's offer to shareholders if it can agree on the takeover terms.
Adelaide-based Santos has operations in Australia, Papua New Guinea, East Timor and the United States, and is a major supplier of liquefied natural gas (LNG) in Australia and Asia.
The Abu Dhabi National Oil Company offered US$5.76 a share in a bid for all outstanding stock, valuing the entire company at US$18.7 billion.
The price per share is 28 per cent higher than Santos' closing level on Friday.
It was the 'final, non-binding' offer from the Middle East oil company, which had previously offered two, lower confidential bids in March, Santos said.
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The firm's stock was trading nearly 12 per cent higher early in afternoon trade on the Australian Securities Exchange.
The Abu Dhabi-based, state-owned energy firm made its bid via a consortium led by its own subsidiary, XRG.
Other members of the consortium include Abu Dhabi Development Holding Company and global investment firm Carlyle.
In a statement, XRG said it aimed to build on Santos' legacy as a trusted energy producer, 'strengthening domestic and international energy security'.
'The proposed transaction is aligned with XRG's strategy and ambition to build a leading integrated global gas and LNG business,' it said.
Santos' board said it intended to 'unanimously recommend' that shareholders vote in favour of the deal if it can agree on terms and there is no better offer.
Last year, Santos and rival Australian energy firm Woodside Energy abandoned talks to create one of the world's largest natural gas exporters.
Santos has been a rumoured takeover target for more than two years, according to a report by E&P Financial Group.
The timing now felt 'opportune' for a takeover offer, it said, with the risks weighing in favour of higher energy prices and Santos having completed some major investment projects.
E&P Financial said it expected the Santos bid to intensify focus on the value of liquefied natural gas assets, citing media reports that the Abu Dhabi National Oil Company was also interested in BP's LNG and gas operations.
Santos said the 'indicative proposal' by its Abu Dhabi suitor was subject to due diligence, agreement on terms, and approval by regulatory authorities in Australia, Papua New Guinea and the United States.
The Middle East-led consortium said its offer would leave Santos' headquarters in Adelaide.
It vowed to work with existing Santos management to accelerate growth and support local jobs.
The group said it planned to invest in Santos' gas and LNG business to provide 'reliable and affordable low carbon solutions to customers in Australia, the Asia-Pacific and beyond'.
XRG said it would ensure Santos makes investments in carbon capture and storage projects, low carbon fuels and 'other decarbonisation initiatives'. AFP
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