Adnoc Arm-Led Consortium Submits Non-Binding Offer To Acquire Australian Energy Company Santos

XRG, the international investment arm of Adnoc, on Monday announced that an XRG-led consortium has submitted an indicative non-binding offer to acquire Santos, a leading international energy company providing reliable, affordable, and cleaner energy to customers in Australia and the Asia Pacific region.

The XRG-led consortium expects to undertake confirmatory due diligence and the non-binding proposal remains subject to a number of conditions before any binding offer will be made or any transaction will proceed.

XRG, along with Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle proposed to offer $5.76 (A$8.89) per Santos share, Reuters reported, making the all-cash offer worth $18.7 billion.

Headquartered in Adelaide, Australia, Santos' operational footprint spans Australia, Papua New Guinea and the United States, with a diverse portfolio across natural gas, LNG, and oil assets. The company is also actively investing in carbon capture and storage (CCS), as well as hydrogen technologies, and is advancing low-carbon fuels to support decarbonisation goals.

The Santos board has responded positively to the offer, with Santos announcing the board's intention to unanimously recommend the XRG-led consortium's proposal to shareholders. The proposal remains subject to the parties entering into a binding agreement following completion of the consortium's due diligence, as well as relevant regulatory and corporate approvals.

The proposed transaction is in line with XRG's strategy to scale international gas, chemicals, and energy solutions to meet increasing demand and unlock substantial value for all stakeholders. The XRG-led consortium brings long-term investment capacity and strategic expertise with the potential to unlock additional gas supply for Santos' customers, strengthening domestic and international energy security. Moreover, Adnoc's world-class trading and shipping capabilities would further enhance Santos' operations, offering a more holistic service to customers while maximizing value.

Adnoc's bid for Santos signals the UAE's growing ambition to expand its energy footprint globally, particularly in LNG, analysts say. The offer highlights the strategic value of Australian gas assets at a time when long-term energy security is front of mind.

“A 28% premium on Santos' share price is a strong vote of confidence for Santos'. Importantly, for Adnoc, Santos represents a solid growth opportunity as a reliable LNG player with strong export links,” Josh Gilbert, Market Analyst at eToro, said in a note to Khaleej Times.

Santos is also entering a key cash-generating phase with major projects nearing completion that should significantly drive production growth. In what is a volatile energy market, locking in supply from a stable, resource-rich country like Australia makes strategic sense, analysts say.

“The existing free trade agreement between the UAE and Australia may also help smooth the path for approval, but domestic regulatory concerns around gas supply will still need to be addressed. That's likely why we haven't seen Santos shares rise to the full offer price just yet. For Santos shareholders, this is a welcome moment after years of M&A speculation. Even if this deal doesn't come to fruition, for Santos, it may draw other suitors or merger talks back to the table, which is a good position to be in,” Gilbert said.

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