The Abu Dhabi government-backed $28 billion bid for Santos (ASX: STO) has been withdrawn sending the oil and gas company’s shares down almost 12% from $7.65 to $6.74.
The XRG bidding consortium included XRG.J.S.C., a subsidiary of the Abu Dhabi National Oil Company, the Abu Dhabi Development Holding Company and global private capital firm Carlyle.
The bid was withdrawn on the evening of Thursday 17 September and was announced by Santos the following day. This had followed Santos telling the consortium on 15 September that it expected binding terms, at the agreed price of $US5.626 a share, to be entered into by 19 September. In response, the consortium informed Santos that it was withdrawing its indicative proposal and did not intend to continue negotiations.
Santos said the consortium had confirmed that it had not found anything in due diligence that would lead it to withdraw its indicative proposal. The consortium had also said it maintained a positive view of the Santos business and had respect for the company’s management team.
This suggests that the consortium did not proceed to a firm offer because it had failed to gain Abu Dhabi government approval to do so.
Santos had agreed to a second extension of due diligence on 25 August after the consortium had indicated it needed extra time to gain necessary approval from the government.
Santos said it continued to generate strong stable cash flows underpinned by a disciplined low-cost operating model. Its two major development projects, Barossa and Pikka phase 1 were well advanced and materially de-risked, positioning the company for around a 30% increase in production by 2027.
Chair Keith Spence said: “Santos has a clear strategy, strong leadership and high-quality growth opportunities across our global portfolio. The Board is confident these strengths will deliver long-term value for shareholders.”
Image: Santos says its operations continue to generate strong stable cash flows.