Mega Deal Signals Global LNG Ambitions
Australia’s second-largest gas producer, Santos, has announced its intent to support a landmark $18.7 billion all-cash takeover bid from a consortium led by Abu Dhabi National Oil Company (ADNOC). If successful, the acquisition would mark the largest all-cash corporate buyout in Australian history and the third-largest takeover ever in the country, according to FactSet data.
The offer, made through ADNOC’s investment arm XRG, is backed by Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle. The consortium has offered A$8.89 ($5.76 USD) per Santos share, representing a 28% premium over the company’s last closing price prior to the announcement.
Strategic LNG Assets at the Heart of the Bid
The consortium’s primary interest lies in Santos’ valuable liquefied natural gas (LNG) assets, especially those located in the Asia-Pacific region, which is expected to drive future global demand.
Santos holds strategic stakes in:
- Gladstone LNG (East Coast Australia)
- Darwin LNG (Northern Australia)
- PNG LNG and the undeveloped Papua LNG (Papua New Guinea)
The company is also developing the Pikka oil project in Alaska, with production set to begin in mid-2026.
“What ADNOC really wants is the LNG assets, since they are inside the Asia Pacific basin… they want assets close to where the future of demand lies,” said Kaushal Ramesh, VP of gas and LNG research at Rystad Energy.
XRG aims to build a 20–25 million metric ton per year LNG portfolio by 2035. Santos, for its part, sold over 5 million tons of LNG in 2023, more than 60% from PNG.
Regulatory Hurdles Pose Deal Risk
Despite early enthusiasm, investors signaled caution. Santos shares rose 15% to A$7.86 in early trading Monday—still below the offer price, reflecting market concerns about regulatory approval risks.
The deal must clear a range of approvals across several jurisdictions, including:
- Australia’s Foreign Investment Review Board (FIRB)
- Australian Securities and Investments Commission (ASIC)
- Papua New Guinea’s regulatory bodies
- U.S. Committee on Foreign Investment (CIFIUS)
To ease national concerns, the consortium has pledged to retain Santos’ headquarters in South Australia.
However, analysts, including MST Marquee’s Saul Kavonic, warn FIRB approval may be a “major risk” due to Santos’ control of critical energy infrastructure. Attempts to spin off domestic infrastructure assets to appease regulators could be complicated by decommissioning liabilities.
Board Recommendation and Shareholder Outlook
The Santos Board stated it will unanimously recommend the transaction—pending agreement on binding terms and the absence of a superior proposal. The deal would also require approval from at least 75% of shareholders.
“The proposed transaction is aligned with XRG’s strategy to build a leading integrated global gas and LNG business,” the consortium said.
This is not the first attempt to acquire Santos. In 2018, the company rejected a $10.8 billion bid from Harbour Energy. Talks with rival Woodside Energy last year also failed to materialize into a merger.
Financial Pressures Make the Timing Right
Santos has faced growing financial pressure. In February, it reported a 16% drop in annual underlying profit and slashed its dividend by 41%. The firm’s market value had been underperforming, making it a prime acquisition target—albeit a tough one to secure.
According to Kavonic, few bidders beyond ADNOC would likely match the premium on offer, given the long-term strategic nature of the deal rather than short-term financial returns.
Outlook: A Transformational Deal in the Balance
If completed, the deal would mark a turning point for global LNG consolidation, giving ADNOC and its partners a strong foothold in the Asia-Pacific—a region critical to future gas demand. But for now, the outcome depends heavily on the ability to navigate regulatory scrutiny and reassure stakeholders across multiple jurisdictions.
With energy geopolitics in flux and demand for cleaner-burning fuels like LNG rising, Santos may soon become a cornerstone in ADNOC’s expanding global gas empire—if regulators allow it.