Santos’s buyout by the Abu Dhabi National Oil Company and The Carlyle Group for almost $30bn is likely to add share price firepower to its listed rivals, market experts say.
Should the deal gain regulatory approval, as many anticipate, institutional equity investors that want energy exposure in Australia will be looking elsewhere to gain it.
The obvious winner will be the market’s largest player, Woodside, with a market capitalisation of $49bn. But smaller energy operatives such as Beach Energy and Karoon Gas could also be winners.
The loss of Santos from the ASX, on the one hand, has some betting that it would make it harder for Woodside to gain regulatory approval for a buyout.
However, convincing the government to let a buyer take over the nation’s largest energy company, Woodside, was always thought to be a tougher ask.
But should the Santos buyout gain regulatory approval, it gives any Woodside suitor confidence that it would gain the same blessing for a buyout, with it hard for the government to block a Woodside transaction if it has allowed one for Santos.
Both companies are major suppliers of domestic gas to Western Australia.
Perhaps a bigger challenge for an interested Woodside buyer is that AustralianSuper is a major investor and, as was the case with energy retailer Origin Energy, it will be reluctant to agree to a buyout deal and may block a transaction.
It holds more than 7 per cent in the company, but could buy more shares to ensure a deal does not happen, as it did when Brookfield bid for Origin Energy in 2023.
Jarden analysts said in a research note that they expected that the timeline for the $8.89-a-share deal could involve due diligence being completed in August, and investors could vote on a deal by the first quarter of 2026, if all goes to plan.
Assisting with Foreign Investment Approval backing could be the November 2024 free trade agreement with the United Arab Emirates.
Jarden expects key regulatory focus areas to include the roughly 24 per cent market share that Santos has in the WA domestic gas market, and PNG government approval, given that Santos operates PNG LNG.
Other potential sensitivities could be the bidder’s commitments to maintain the Santos brand and an Adelaide headquarters and local operations.
Santos shares rose 0.4 per cent to $7.79, while Woodside fell 0.2 per cent to $25.65.
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