The South Australian government has issued a warning that it might intervene if a proposed $30 billion takeover of Santos, the state’s largest company, is deemed not to align with the interests of South Australians.
On Monday, Santos announced to the stock exchange that it had received a takeover offer from a consortium led by XRG, the international investment arm of the Abu Dhabi National Oil Company. The consortium, which includes prominent US private equity firm Carlyle, has proposed to acquire all Santos shares at $8.89 per share. This offer represents a 28 percent premium over Santos’ last closing price of $6.96 and values the company at approximately $28.8 billion.
Santos’ board has signaled its support for the bid, stating it intends to unanimously recommend that shareholders vote in favor of the deal, provided no better offers emerge and subject to the finalization of the agreement. However, the transaction still requires several layers of regulatory approval, including from the Foreign Investment Review Board, the Australian Securities and Investments Commission, and the National Offshore Petroleum Titles Administrators. Authorities in Papua New Guinea and the United States must also weigh in.
Founded in 1954 as South Australia and Northern Territory Oil Search, Santos is a cornerstone of the state’s economy and is among the top 20 companies listed on the ASX. The company manages significant oil and gas assets in the Cooper Basin in South Australia, Gladstone in Queensland, Western Australia, and Papua New Guinea.
As the deal attracts scrutiny, the South Australian government’s intervention could add another layer of complexity to the acquisition process. The government’s concerns center on ensuring that the interests of the state and its residents are safeguarded in any potential transaction involving one of its most significant economic contributors.
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