Adnoc makes USD 18.7 bn play for Santos: Adnoc’s international investment arm XRG has submitted an indicative, non-binding USD 18.7 bn takeover bid alongside Abu Dhabi sovereign wealth fund ADQ and private equity firm Carley to Australian oil and gas producer Santos, Santos said in a statement. The company has already said it intends to accept the offer, provided it does not receive a superior proposal.

The acquisition would require 75% support from Santos’ investors, as well as approval from several Australian regulators, including the Foreign Investment Review Board, which one analyst told Reuters could be a risk to the agreement, since it involves critical energy infrastructure in Australia. The company is the biggest supplier of natural gas in Australia, and owns pipeline gas and oil assets as well.

The details: The consortium will pay USD 5.76 (AUD 8.89) per share as part of the transaction, marking a 28% premium to Santos’ last closing price of AUD 6.96.

Due diligence negotiations are underway: Santos intends to provide the consortium with access to due diligence, but is currently negotiating terms of a deed that would give it exclusive access, the statement said.

Santos has been subject to merger talks before, with a potential transaction merging it with Australian rival Woodside in what would have created a AUD 80 bn oil and gas giant, but Santos rejected the proposal.

XRG has its eyes on LNG: State-owned energy giant Adnoc is boosting its LNG capabilities both at home and abroad, with a plan to establish a top-five integrated global gas and LNG business, setting a target of 20-25 mn tons per annum (mtpa) in capacity by 2035, having already secured an enterprise value of over USD 80 bn in its first six months. The group is assessing upstream gas M&A and LNG moves in the US and Canada to up its regional footprint there. Back in March XRG said it would make a “very large and significant investment,” in the US and last month it was reported that XRG would soon begin deploying capital — including in the US — after fine-tuning its internal strategy. The five-year strategy also builds on recent agreements in the US, Mozambique, Egypt, and Turkmenistan. It has also been eyeing a potential acquisition of some of British Petroleum’s (BP) assets, with an interest specifically in its LNG assets.

ADVISORS- Goldman Sachs and JB North & Co are financial advisers to Santos, while Rothschild & Co is acting as independent board adviser. Herbert Smith Freehills Kramer is acting as legal adviser to Santos.

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