Strategic Shake-up: Santos (ASX:STO) Weighs A$30 Billion Takeover from ADNOC Consortium

June 16, 2025 01:31 PM AEST | By Team Kalkine Media

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Strategic Shake-up: Santos (ASX:STO) Weighs A$30 Billion Takeover from ADNOC Consortium — Image source: Shutterstock

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Highlights

Santos receives A$30 billion proposal from ADNOC-led group

Deal includes Australian job and infrastructure commitments

Regulatory approvals remain a key hurdle to transaction

Santos Ltd (ASX:STO), one of Australia's leading oil and gas producers, is considering a major acquisition proposal valued at A$30 billion from a consortium led by XRG P.J.S.C, a subsidiary of the Abu Dhabi National Oil Company (ADNOC). This bid signifies ADNOC’s bold move into the Australian energy sector and signals broader ambitions to scale its global liquefied natural gas (LNG) footprint.

The proposed cash offer stands at US$5.76 (A$8.89) per share—reflecting a 28% premium over Santos’ last closing price. The Santos board has granted the consortium a window for exclusive due diligence, highlighting early support for the deal.

The international consortium includes the Abu Dhabi sovereign wealth fund ADQ and private equity firm Carlyle, forming a cross-border alliance aimed at strengthening global LNG market positioning. The proposal also outlines significant regional commitments: Santos' headquarters will remain in Adelaide, and the company will continue supporting Australian jobs, infrastructure, and community engagement initiatives.

In addition to securing energy supply, the consortium has voiced alignment with Santos’ legacy of reliability. It seeks to amplify gas development both in Australia and across the Asia-Pacific region. A key part of the shared agenda includes advancing carbon capture and storage (CCS) projects. Notably, Santos’ Moomba CCS initiative in South Australia complements ADNOC’s efforts in the UAE.

This latest proposal follows two earlier confidential approaches made in March 2025, at lower valuations. If a final agreement is reached, Santos has indicated that it would support the deal, provided an independent expert deems it fair and no superior proposal surfaces.

However, regulatory challenges loom. The deal requires approval from multiple agencies, including the Foreign Investment Review Board (FIRB). Given Santos’ ownership of essential gas infrastructure in the Cooper Basin and its position as Australia’s second-largest gas producer, intense scrutiny is expected.

The proposal also comes in the wake of previously stalled merger talks between Santos and Woodside Energy (ASX:WDS). For ADNOC, this move marks a strategic diversification aimed at cementing its influence within energy markets beyond the Middle East.

Meanwhile, policymakers in Australia may leverage the transaction to enhance domestic gas supply as part of an ongoing federal review of east coast gas market regulations. With Santos’ Gladstone LNG facility under scrutiny for sourcing domestic gas for exports, the deal’s timing could offer opportunities for energy security reforms.

This development could redefine the landscape of Australia’s gas sector while accelerating ADNOC’s global expansion goals.

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