The group led by XRG PJSC, backed by ADNOC, ADQ and Carlyle, requested a four-week extension to the exclusivity period originally agreed with Santos Limited. This consortium is seeking to acquire 100% of the shares of the Australian company through a non-binding indicative offer of close to US$19 billion.
Although due diligence is nearly complete and no objections have been identified that would jeopardize the proposal, the parties have not yet been able to agree on the final terms of a binding contractual scheme, known as the SIA. The lack of consensus delays the possibility of signing the definitive agreement.
Regulatory obstacles to the purchase of Santos
One of the critical points is that, even if the terms of the contract are agreed, the XRG consortium still requires internal approvals to formalize the transaction. These approvals, as reported by the consortium, could take at least four additional weeks, even with an expedited process.
This scenario makes it unlikely that the transaction will be completed before August 22, the deadline for the current exclusivity period. Santos has communicated that negotiations are ongoing and that it will continue to inform its investors in accordance with the market’s continuous disclosure rules.
A key move in the gas transition
The transaction has strategic implications for the energy market. Santos is a key supplier of liquefied natural gas (LNG) in Asia (LNG) in Asia and has relevant operations in Australia, Timor-Leste and the U.S. For its part, XRG and ADNOC are executing a five-year plan aimed at expanding their LNG capacities and consolidating an integrated gas business chain, with targets of up to 25 million tons per year by 2035.
XRG’s interest in Santos responds to this logic of vertical integration in fuel supply and production supply and production of fuels with a lower carbon footprint. with a lower carbon footprint.
Shareholders on pause
For the time being, no shareholder action is required. Uncertainty persists as to whether or not the acquisition will be completed, and everything will depend on the internal timing of the consortium, as well as on the evolution of the terms of the agreement.
Source: Santos
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