Santos Limited has agreed to extend the exclusivity period with the XRG Consortium, allowing more time to finalize due diligence for a potential A$8.89 per share cash takeover. The extension keeps the door open for competing bids, maintaining shareholder options.
- Two-week extension granted to XRG Consortium for due diligence
- Potential takeover offer at A$8.89 per share in cash
- Exclusivity restrictions remain with fiduciary exception for superior bids
- No certainty the transaction will proceed or terms will be agreed
- Santos to keep shareholders informed under continuous disclosure rules
Extension Signals Seriousness but Uncertainty Remains
Santos Limited (ASX, STO) has announced a two-week extension to the exclusivity period granted to the XRG Consortium, led by XRG P.J.S.C. and including heavyweight partners such as Abu Dhabi National Oil Company, ADQ, and Carlyle. This extension, now running until 22 August 2025, allows the consortium additional time to complete its due diligence and work towards a binding scheme implementation agreement for a potential acquisition of Santos at a cash price of A$8.89 per share.
The consortium’s due diligence is reportedly nearing completion, with no material issues uncovered that would cause them to withdraw their indicative proposal. This suggests a level of confidence in Santos’ assets and operations, but the extension also underscores the complexity and scale of the transaction under consideration.
Maintaining Flexibility Amid Takeover Speculation
While exclusivity restrictions remain in place during this period, Santos has preserved a fiduciary exception allowing it to entertain potentially superior proposals from other interested parties. This clause keeps the competitive tension alive, ensuring that shareholders could benefit from better offers should they emerge. It also reflects Santos’ cautious approach, balancing cooperation with the XRG Consortium against its duty to maximise shareholder value.
Investors should note that there is no guarantee the consortium will reach a binding agreement on terms acceptable to Santos or that the transaction will ultimately proceed. The company has reiterated that shareholders are not required to take any immediate action and will be kept informed as developments unfold.
Strategic Implications for Santos and the Market
The involvement of major Middle Eastern investors alongside a global private equity firm signals strong international interest in Santos’ portfolio, which includes significant oil and gas assets. The proposed cash offer at A$8.89 per share represents a premium over recent trading levels, potentially offering an attractive exit for shareholders.
However, the extension also highlights the challenges inherent in large-scale energy sector transactions, including regulatory scrutiny, valuation complexities, and geopolitical considerations. Market participants will be watching closely for any competing bids or shifts in the consortium’s stance as the new deadline approaches.
Bottom Line?
As Santos and the XRG Consortium navigate the final stages of due diligence, the next fortnight could prove pivotal for shareholders and the broader energy market.
Questions in the middle?
- Will any competing bidders emerge during the fiduciary exception period?
- What are the key due diligence findings influencing the consortium’s final offer terms?
- How might geopolitical factors impact the consortium’s appetite or regulatory approvals?