Abu Dhabi’s Adnoc makes $19bn bid to take over | Australian Markets

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A consortium led by Abu Dhabi’s national oil company has made a $19bn bid to take over one of Australia’s largest power teams.

Santos stated XRG, an investment arm of the Abu Dhabi National Oil Company, had made an indicative money offer of $5.76 a share, valuing the Adelaide-based company at $18.7bn. It represents a 28 per cent premium to Santos’s closing share price final week.

Abu Dhabi Developmental Holding Company and US non-public equity fund Carlyle are additionally within the bidding group.

If the deal closes, it could be the most important takeover of an Australian company, in accordance to information compiled by Dealogic primarily based on the money paid and whole deal dimension of $22bn together with debt.

That worth would surpass the sale of Sydney Airport to infrastructure buyers, Blackstone’s acquisition of AirTrunk and the merger of Woodside and BHP’s oil and fuel operations.

Santos stated its board would advocate the offer, subject to phrases being agreed, and that it had rebuffed two decrease bids from the XRG-led group in late March.

Santos’s shares opened 11 per cent increased in Australia on Monday.

The bid for the natural fuel developer comes during a period of volatility within the power markets as battle escalates between Israel and Iran.

Santos has been linked with a sale, break-up or asset selldown for 2 years and held talks with Australian rival Woodside over a merger final yr with out putting a deal.

Adnoc has been linked with a takeover prior to now due to the Australian company’s development pipeline in natural fuel and its provide preparations into Asia.

Adam Martin, an analyst at E&P, stated a growing concentrate on the worth of liquefied natural fuel property had put Santos back into play.

“Now does feel like an opportune time to acquire Santos with risks building on energy prices and Santos entering a free cash inflection phase with the completion of several major growth projects,” he stated.

Australia and the United Arab Emirates signed a free trade settlement final yr as half of a nearer alliance between the 2 international locations on agriculture. Analysts at Citi stated Australia’s Foreign Investment Review Board would possibly nonetheless be a “significant hurdle” for XRG, provided that Santos is a key provider to Australia’s home fuel market.

Jim Chalmers, Australia’s treasurer, who could have closing say over the deal, stated on Monday in an interview with broadcaster ABC that ruling on whether or not Santos could possibly be acquired was a “big decision” for the nation however that he wouldn’t pre-empt the review board’s ruling.

XRG was created by Adnoc to invest in international power property, with a specific concentrate on natural fuel, chemical and low-carbon applied sciences.

Santos matches that strategy given its development of gasfields and carbon seize and storage property together with the Moomba area in distant South Australia.

In December Sultan Al Jaber, Adnoc’s chief govt, stated XRG would have an enterprise worth of “over $80bn” and needed to double the worth of its property over the subsequent decade.

Bernard Looney, the previous head of oil main BP, is a member of the XRG board.

Additional reporting by Arjun Neil Alim in Hong Kong