Santos (STO.AX) reported on Tuesday that the $18.7 billion takeover bid from an Abu Dhabi National Oil Company (ADNOC)-led consortium would be delayed for at least another month, extending beyond the expiry of its exclusive due diligence period. Shares of Santos, Australia’s second-largest independent gas producer, fell as much as 3.5% to A$7.68, a five-week low, as investors grew increasingly concerned about the future of the deal.
James Hood, senior energy analyst at Regal Funds Management, said the market was signaling greater risk and uncertainty. Santos’ stock has consistently traded below the consortium’s A$8.89 per share offer announced on June 16, which investors saw as a sign of doubt that the transaction would proceed.
The consortium—comprising ADNOC’s international investment arm XRG, Abu Dhabi Development Holding Company (ADQ), and private equity firm Carlyle—had been expected to conclude exclusive talks with Santos on Friday. Instead, the group requested at least four more weeks to secure approvals before formalizing its bid. In a separate statement, XRG said it would continue due diligence and negotiations to progress toward a binding offer.
Including net debt, the transaction would give Santos an enterprise value of A$36.4 billion, which would rank as the largest all-cash corporate takeover in Australian history, according to FactSet. Analysts highlighted the regulatory and political challenges involved. Kaushal Ramesh, vice president of gas and LNG research at Rystad Energy, said the deal was never going to be easy given energy security concerns, national interest considerations, and multiple stakeholders.
The takeover requires clearance from regulators in Australia, Papua New Guinea, and the U.S., as Santos holds assets in each jurisdiction. Analysts noted that approval from Australia’s Foreign Investment Review Board (FIRB) posed the greatest challenge, as the government could hesitate to hand control of key energy assets to Middle Eastern investors. Jamie Hannah, deputy investment director at Van Eck, said the delay did not alter the main risk, which remained FIRB approval.
Australia’s gas sector remains politically sensitive, with regulators warning that eastern states face a supply shortfall from 2028 without new projects. Santos has long argued that its delayed Narrabri gas development in New South Wales could help ease the deficit.
The latest setback followed Santos’ abandoned $52 billion merger talks with Woodside Energy (WDS.AX) last year. On Tuesday, Woodside CEO Meg O’Neill said the company was not interested in making a rival bid.
If successful, the consortium would gain control of Santos’ Gladstone LNG and Darwin LNG operations, as well as stakes in PNG LNG and the undeveloped Papua LNG, widely considered Santos’ most valuable assets. The company is also developing the Pikka oil project in Alaska, which is expected to begin producing in 2026. In a separate announcement, Santos postponed its interim earnings release to August 25 from August 20.
Source: Reuters
