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A consortium led by Abu Dhabi’s nationwide oil firm has made a $19bn bid to take over one in all Australia’s largest power teams.
Santos mentioned XRG, an funding arm of the Abu Dhabi National Oil Company, had made an indicative money provide of $5.76 a share, valuing the Adelaide-based firm at $18.7bn. It represents a 28 per cent premium to Santos’s closing share worth final week.
Abu Dhabi Developmental Holding Firm and US non-public fairness fund Carlyle are additionally within the bidding group.
If the deal closes, it might be the biggest takeover of an Australian firm, based on information compiled by Dealogic primarily based on the money paid and complete deal measurement 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 mentioned its board would advocate the provide, topic 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 larger in Australia on Monday.
The bid for the pure fuel developer comes throughout a interval 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 12 months without striking a deal.
Adnoc has been linked with a takeover prior to now because of the Australian firm’s growth pipeline in pure fuel and its provide preparations into Asia.
Adam Martin, an analyst at E&P, mentioned a rising give attention to the worth of liquefied pure fuel belongings had put Santos again into play.
“Now does really feel like an opportune time to amass Santos with dangers constructing on power costs and Santos getting into a free money inflection section with the completion of a number of main development initiatives,” he mentioned.
Australia and the United Arab Emirates signed a free commerce settlement final 12 months as a part of a more in-depth alliance between the 2 nations on agriculture. Analysts at Citi mentioned Australia’s Overseas Funding Evaluation Board would possibly nonetheless be a “vital hurdle” for XRG, on condition that Santos is a key provider to Australia’s home fuel market.
Jim Chalmers, Australia’s treasurer, who can have the ultimate say over the deal, mentioned on Monday in an interview with broadcaster ABC that ruling on whether or not Santos could possibly be acquired was a “huge choice” for the nation however that he wouldn’t pre-empt the evaluation board’s ruling.
XRG was created by Adnoc to put money into world power belongings, with a specific give attention to pure fuel, chemical and low-carbon applied sciences.
Santos suits that technique given its growth of gasfields and carbon seize and storage belongings together with the Moomba area in distant South Australia.
In December Sultan Al Jaber, Adnoc’s chief govt, mentioned XRG would have an enterprise worth of “over $80bn” and wished to double the worth of its belongings over the subsequent decade.
Bernard Looney, the previous head of oil main BP, is a member of the XRG board.
Extra reporting by Arjun Neil Alim in Hong Kong
