An offshore consortium has withdrawn its US$18.7 billion (A$28.1 billion) takeover bid for oil and gas producer Santos.
Santos said the XRG consortium decided not to proceed after being given a deadline of 19 September for making an indicative offer.
The group, including the Abu Dhabi National Oil Company, Abu Dhabi Development Holding Company (ADQ) and private equity group Carlyle, made a non-binding indicative cash offer of US$5.76 (A$8.65) per share in June.
The offer, made via a scheme of arrangement, had the support of the target company’s board but was subject to various conditions.
The Santos Board told XRG on 15 September it was expected to make a binding offer on acceptable terms by 19 September, and in response, the consortium decided to withdraw and not proceed.
“In that notification, the XRG Consortium confirmed that it maintains a positive view of the Santos business and has respect for the management team,” Santos said in an ASX announcement.
Santos had expressed concerns about the delays in the bid, with XRG not agreeing to acceptable terms to protect the shareholders from time delay and regulatory risks.
The consortium would also not agree to an appropriate allocation of risk between XRG and Santos shareholders.
Santos said it continued to execute its strategy to deliver superior shareholder value, with its base business generating strong, stable cash flows underpinned by a disciplined low-cost operating model.
Santos was positioned for a 30% increase in production by 2027 as its two major development projects, Barossa and Pikka phase 1, were well advanced and materially de-risked.
As these projects come online, Santos’ capacity to generate free cash flow would materially strengthen, supporting greater returns to shareholders.
“Over the past decade, our disciplined low-cost operating model has driven production costs down, strengthened the portfolio, and delivered strong free cash flow and returns for shareholders,” the company said.
Santos (ASX: STO) shares had closed four cents (0.52%) lower at A$7.65 on Wednesday, giving the company a value of A$24.85 billion.
