An XRG-led consortium that includes Abu Dhabi Development Holding Company (ADQ) and Carlyle, has officially withdrawn its $18.7bn (A$28.17) indicative offer to acquire 100% of the issued shares of Australian oil and gas producer Santos.
The decision not to proceed with a binding offer comes after extensive evaluation and consideration of commercial factors.
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Last month, Santos reached an agreement to extend the Process and Exclusivity Deed (process deed) for a second time. This extension aimed to facilitate the finalisation of the Scheme Implementation Agreement (SIA) and allow the XRG Consortium to secure all necessary approvals to enter into a binding transaction.
XRG Consortium had then confirmed that it found no issues during due diligence to cause a withdrawal.
Santos had expected to enter an SIA with the consortium at the proposed offer price of $5.62 per share if a binding proposal was received by 19 September.
However, in response, the XRG Consortium notified the Santos board of its decision to withdraw its indicative proposal and that it will not be moving forward with the potential transaction.
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By GlobalDataSantos emphasised that the consortium demonstrated an unwillingness to embrace a fair distribution of risk. This reluctance extended to its hesitance in assuming responsibility for securing regulatory approvals, as well as its commitment to the development and supply of domestic gas.
In a statement, XRG stated: “While disappointed not to move forward, XRG, and its consortium partners, are responsible, disciplined investors with a clear focus on creating value for our shareholders and driving long-term growth.”
In June, Santos announced that the recent offer from the consortium followed the rejection of two earlier proposals made in March. These earlier offers, which were not disclosed to the public, were priced at $5.04 and $5.42 per share, reported Reuters.
Santos previously turned down a $10.8bn offer from private equity-backed Harbour Energy in 2018. Additionally, the company opted to walk away from negotiations with its larger Australian competitor, Woodside Energy, last year, which could have led to the formation of an oil and gas company potentially valued at A$80bn.
