Oil and gas company Santos (ASX: STO) has revealed it does not now expect to receive a firm acquisition offer from Abu Dhabi government-backed suitor XRG Consortium for at least another four weeks, and likely longer.
The market reacted to the announcement by marking down Santos shares from a recent high just above $8 to $7.67 in intra-day trading on Wednesday 20 August.
Santos had announced in June that the XRG Consortium, which includes global private capital firm Carlyle, had made a non-binding indicative offer at $US5.76 per share which valued Santos at $28.9 billion.
In a 19 August ASX announcement, Santos said it had “this week been informed by the XRG Consortium that even if the terms of an SIA [scheme implementation agreement] were agreed and final due diligence was complete, it will still not be in a position to sign a binding SIA, as it is yet to obtain requisite final approvals which are required by the XRG Consortium in order to enter into a binding transaction. The XRG Consortium has indicated that these approvals are expected to take four weeks to obtain (assuming expedited process, potentially longer without) from the time that both due diligence is complete and the terms of an SIA are agreed in principle.”
Santos said discussions and final confirmatory due diligence continued to be collaborative.
The XRG Consortium’s period of exclusive due diligence expires on Friday 22 August.
Santos said it had decided to defer release of its results for the half-year to 30 June to Monday 25 August so that the release would come after the end of the XRG Consortium’s due diligence period. It planned to provide a further update on discussions with the XRG Consortium at that time.
The consortium is being led by XRG, the international investment arm of state-owned Abu Dhabi National Oil Company (ADNOC). XRG is the majority stakeholder in the consortium. Other consortium members are P.J.S.C., a subsidiary of ADNOC, another government business, Abu Dhabi Development Holding Co., and global private capital firm Carlyle Group (NASDAQ: CG).
Image: Santos is an important supplier of gas to the Australian market and for export.