Santos Acquisition off, Says XRG-led Consortium
The XRG-led Consortium, which has conducted a comprehensive evaluation of its offer to acquire Australia’s oil and gas major Santos, announced that it has withdrawn its indicative offer and will not proceed with a binding offer for Santos.
Following a comprehensive evaluation, and taking into account all commercial factors and the terms of the Scheme Implementation Agreement (SIA) required by the Santos Board, the Consortium has determined that it will not be proceeding with the proposed transaction.
While disappointed not to move forward, XRG and its consortium partners, which are responsible and disciplined investors, said that it was clear on creating value for our shareholders and driving long-term growth.
The consortium extends its appreciation to the Santos management team for their assistance in the process, as well as all levels of government and other stakeholders for their positive and constructive engagement.
“This reinforced our confidence in Australia’s energy and investment environment, as well as the other locations that Santos operates,” XRG said.
The consortium was prepared to undertake new long-term commitments to Australian energy production that would deliver meaningful benefits to domestic gas consumers and enhance regional energy security.
As a strategic long-term investor, XRG remains dedicated to pursuing value-accretive opportunities across gas & LNG, chemicals, and energy solutions, and has a rich and deep pipeline of investment opportunities which we will continue to pursue.
“Terms Not Agreeable”
Meanwhile Santos said that the XRG-consortium, which overnight scrapped its takeover bid for the oil giant, would not agree to acceptable terms which protected the value of the potential transaction for shareholders of Santos.
Santos said that its board advised the consortium on Monday that it expected to enter into an SIA at the agreed offer price of $5.626 per share, if a binding proposal was received from the consortium on acceptable terms on or prior to September 19.
The consortium has consequently notified the Santos board on Wednesday evening of its decision to withdraw its indicative proposal and not proceed with the takeover.
Santos said the consortium would not agree to acceptable terms, or to an appropriate allocation of risk between the consortium and Santos’ shareholders under the SIA. This included the obligation of the consortium to secure regulatory approvals and the provision of a reasonable commitment to the development and supply of domestic gas.
Santos Chair Keith Spence said that over the past decade, their disciplined low-cost operating model has driven production costs down, strengthened the portfolio, and delivered strong free cash flow and returns for shareholders.
“With production set to rise as Barossa and Pikka phase 1 come online, and unit production cost expected to trend lower over time, our strategy is clear: generate cash, reward shareholders, reinvest to backfill and sustain our infrastructure, and build and grow our production, while continuing to operate safely and reliably,” he 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,” he added.
