Santos takeover deal faces weeks-long delay as ADNOC consortium seeks approvals

Doubts over a $30bn takeover of oil and gas giant are emerging, as its Abu Dhabi-led suitor reveals unexpected delays that could derail the massive deal.

Santos will reveal the status of takeover talks with its $30bn bidder in the coming days, but doubts over the deal are emerging, with the bidding consortium flagging a weeks-long delay to a binding offer.

The oil and gas giant was due to release its half-year results on Wednesday, but has pushed that back to Monday next week, following an exclusive due diligence period with the Abu Dhabi National Oil Company (ADNOC)-led consortium which expires on Friday.

In a statement to the Australian Securities Exchange on Tuesday morning, Santos said it had only this week been made aware of internal approvals required within the bidding consortium for it to enter into a binding deal.

“While discussions and final confirmatory due diligence have continued to be collaborative, the parties are yet to reach agreement on acceptable terms of a binding SIA (scheme implementation agreement),” Santos said in a statement to the Australian Securities Exchange on Tuesday.

Santos’ Moomba gas plant in South Australia. Picture: Brenton Edwards

“Further, Santos has this week been informed by the XRG Consortium that even if the terms of an SIA were agreed and final due diligence was complete, it will still not be in a position to sign a binding SIA, as it is yet to obtain requisite final approvals which are required by the XRG Consortium in order to enter into a binding transaction.

“The XRG Consortium has indicated that these approvals are expected to take four weeks to obtain (assuming an expedited process, potentially longer without) from the time that both due diligence is complete and the terms of an SIA are agreed in principle.”

Santos had already given the bidding consortium more time to formalise its $30bn takeover bid, providing a two-week extension to an exclusive due diligence period that was initially due to expire on August 8.

The consortium, which made its non-binding offer on June 13, would not comment on which parties in the bidding group – led by ADNOC subsidiary XRG and including Abu Dhabi Development Holding Company and private equity giant Carlyle – required more time for their internal approvals, but said it remained committed to ongoing talks over a potential deal.

“Given the scale of the transaction, the XRG-led consortium continues to conduct due diligence and progress negotiations on a binding agreement,” the consortium said in a statement.

“Once due diligence has been completed and the scheme implementation agreement has been agreed, customary corporate approvals will be sought.

“Together, the consortium partners bring extensive operational expertise, investment capacity and the long-term vision required to develop and scale complex energy projects and low-carbon solutions.”

Santos said it would provide an update on the status of discussions with the XRG consortium when it hands down its half-year results on Monday.

The company’s shares were trading 2.9 per cent lower on Monday morning at $7.73.

Originally published as Santos takeover deal faces weeks-long delay as ADNOC consortium seeks approvals