Santos Deal Extension Raises Questions on Potential Rival Bids and Final Outcome
Santos Limited has agreed to extend exclusivity with the XRG Consortium, led by Abu Dhabi National Oil Company, to finalize due diligence and progress a potential US$5.76 per share acquisition. The consortium remains committed, but the deal’s completion is still uncertain.
- Exclusivity period extended to 19 September 2025
- XRG Consortium confirms no due diligence issues found
- Potential acquisition valued at US$5.76 per Santos share
- Fiduciary exception allows Santos to consider superior proposals
- No guarantee binding agreement or transaction will proceed
Background on the Proposal
Santos Limited (ASX – STO), one of Australia's leading oil and gas producers, has announced an extension to its exclusivity agreement with the XRG Consortium. This group, led by Abu Dhabi National Oil Company and including Abu Dhabi Development Holding Company and private equity firm Carlyle, has put forward a non-binding indicative proposal to acquire Santos for US$5.76 per share via a scheme of arrangement.
Progress and Due Diligence
Since the initial announcement in June 2025, the consortium has been conducting detailed due diligence on Santos’ operations and financials. On 24 August, the consortium confirmed it has not uncovered any issues that would cause it to withdraw its offer. This positive due diligence outcome has prompted Santos to agree to extend the exclusivity period to 19 September 2025, allowing the consortium more time to complete approvals and finalize the Scheme Implementation Agreement (SIA).
Shareholder Protections and Market Dynamics
The SIA is expected to include customary protections for Santos shareholders, particularly in the event of delays before the transaction’s completion. Importantly, Santos retains a fiduciary exception to its exclusivity restrictions, meaning it can still consider and negotiate with other potential bidders if a superior proposal emerges. This clause keeps the door open for competitive tension, which could influence the final terms or even the outcome of the deal.
Uncertainty Remains
Despite the progress, Santos cautions that there is no certainty the binding agreement will be reached or that the transaction will proceed. Shareholders are advised to take no immediate action and await further updates. The extension signals ongoing serious negotiations but also underscores the complexities involved in such a significant cross-border acquisition.
Strategic Implications
If completed, the acquisition would mark a major shift in Santos’ ownership, bringing in substantial backing from Middle Eastern sovereign interests and global private equity. This could have implications for Santos’ strategic direction, capital allocation, and operational priorities in the coming years.
Bottom Line?
As exclusivity extends, all eyes turn to whether this high-stakes deal will cross the finish line or invite rival bids.
Questions in the middle?
- Will the XRG Consortium secure all necessary regulatory and shareholder approvals by mid-September?
- Could a competing bidder emerge given the fiduciary exception in Santos’ exclusivity agreement?
- How might the deal, if completed, reshape Santos’ strategic priorities and market positioning?
