Santos takeover bid by UAE Team Emirates XRG key sponsor creates world cycling link | Paul Starick

There are huge questions for the future of SA’s economy in the takeover move – but there’s a big one for fans of cycling too, writes Paul Starick.

One firm has naming rights to the world’s number one cycling team, with its brand emblazoning the jersey of triple Tour de France winner Tadej Pogacar.

The other has, since 2010, had naming rights to the Tour Down Under, the opening race of cycling’s world tour calendar, centred on Adelaide.

The first firm, Abu Dhabi’s XRG, is spearheading a consortium of investors which has placed a $30bn bid for the second, Santos, by far the biggest company headquartered in South Australia.

For cycling fans, the big question about a successful takeover will be if the sponsorship synergy can convince world number one Pogacar to headline the Tour Down Under, leading the top-ranked UAE Team Emirates XRG.

But the big questions are about the impact on the state economy, corporate Adelaide, the community and jobs.

XRG is the wholly owned overseas investment arm of Abu Dhabi National Oil Company (ADNOC).

Tadej Pogacar, of Slovenia and UAE Team Emirates – XRG, celebrates at podium as yellow leader jersey winner during the 77th Criterium du Dauphine on June 15 at Plateau du Mont-Cenis, France. Picture: Dario Belingheri/Getty Images.

Announcing the UAE Team Emirates co-naming deal last December, it nominated its enterprise value at more than $US80bn ($123bn).

The consortium has issued a “non-binding indicative” offer of $8.89 a share, which the Santos board has indicated it intends to endorse.

The consortium’s initial news release said it “intends”, subject to the deal closing, to “maintain Santos’ headquarters in Adelaide, brand, and operational footprint in Australia and key international operating hubs”.

It is understood XRG representatives met with Premier Peter Malinauskas on Wednesday and gave similar assurances.

The confidence that the Premier and his Energy Minister Tom Koutsantonis have in these assurances will be a critical test for the bid’s future.

Premier Peter Malinauskas and Santos chief executive officer Kevin Gallagher on January 31 at the Moomba CCS (carbon capture and storage) plant, a joint venture of Santos and Beach Energy. Picture: Brenton Edwards

There is a certain inevitability about a takeover bid for Santos eventually proving successful.

But there are no guarantees, particularly in the face of global economic forces, that the headquarters will remain in Adelaide.

Even if they do, there must be flexibility for any firm to adapt to technological change.

For example, global apps like Workday now have assumed many of the operations once performed by payroll and human resources departments.

XRG is keen to emphasise that it forges “forward-thinking partnerships rooted in trust and respect” and that it is authentic, acting with “integrity, guided by a deep sense of purpose”.

There is no reason to disbelieve these statements, on the company’s website. But, the point is, there can be no guarantees that Santos’s head office will remain in Adelaide, at current levels, without this being written into any deal.

Santos’s importance to the Adelaide business sector, CBD, state economy and wider community cannot be underestimated.

In late 2023, when an ultimately scuttled merger with Woodside was mooted, The Advertiser reported analysis showing this would cost the state economy more than $100m annually.

L-R Santos chief executive officer Kevin Gallagher, Premier Peter Malinauskas, federal Trade and Tourism Minister Don Farrell and Beach Energy chief executive officer Brett Woods on January 31 at the Moomba CCS (carbon capture and storage) plant. Picture: Brenton Edwards

When the takeover bid was revealed on June 16, Mr Malinauskas declared: “The state government’s priority at all times is to ensure that South Australian jobs remain in South Australia, and to maintain Santos’ headquarters in Adelaide.”

Mr Koutsantonis said legislative “levers” ensured the state had “a say in this potential takeover” and vowed to look carefully at the proposal while “engaging constructively with the proponents”.

These are reasonable objectives and should be expected of a state government. The degree to which they can be achieved is another matter.

Analysis from financial services firm Barrenjoey indicates foreign investment approval for the takeover is “more likely than not”.

This bid for Santos seems to have more momentum than others, plus offers the potential for valuable investments and expansions at scale.

But it remains uncertain whether this is in the state’s interest and how much that shapes the takeover bid’s fate.

Originally published as Santos takeover bid by UAE Team Emirates XRG key sponsor creates world cycling link | Paul Starick