The Santos Ltd (ASX: STO) share price has soared more than 11% after the ASX energy share revealed a takeover bid.
Takeover offer for Santos shares
Investors have reacted excitedly to the company’s news that it has received a takeover proposal to take over the whole business.
Santos announced to the ASX today that on 13 June 2025, it received a non-binding indicative proposal from a consortium led by XRG, a subsidiary of Abu Dhabi National Oil Company and includes Abu Dhabi Development Holding Company (ADQ) and Carlyle (a private equity group).
The proposal is to buy all of the Santos shares for a cash offer of US$5.76 (A$8.89) per share via a scheme of arrangement.
That offer represents a 28% premium to the last closing price on 13 June 2025, which was A$6.96.
Is this the final offer?
Santos noted that this indicative proposal was expressed as a “final non-binding indicative offer”.
This comes after two confidential, non-binding and indicative offers from the XRG consortium to acquire 100% of Santos shares on 21 March 2025 for US$5.04 (A$8) in cash per Santos share and on 28 March 2025 for US$5.42 (A$8.60) cash per share.
Considering this final offer is around 10% higher than the first offer, I can see why the offer isn’t going to be any higher.
Still conditional
Santos noted that offer is subject to the satisfactory completion of confirmatory due diligence by the XRG consortium and the negotiation and execution of a takeover agreement with the ASX energy share on typical terms and conditions.
The takeover, if accepted, would also be conditional, among other things, on requiring approval from the Foreign Investment Review Board (FIRB), ASIC and other regulator bodies in PNG and the US.
Santos response
The Santos board has decided that it’s in the best interests of Santos shareholders to provide the XRG consortium with access to confidential information for due diligence and negotiate terms and conditions for a possible takeover.
The XRG consortium wants to enter into a process and exclusivity deed before progressing to due diligence and negotiations. Santos said it will negotiate the terms of the process and exclusivity deed.
Santos’ board said that, subject to reaching acceptable agreement terms, it intends to unanimously recommend that investors in Santos shares vote in favour of the deal.
Final thoughts on Santos shares
The ASX energy share has long been seen by some fund managers as undervalued, so it’s interesting that this major offer has come in.
I do wonder if Santos may receive more takeover interest now the world knows about the discussions. There is still a substantial gap between the current Santos share price and the offer price – it’s not guaranteed the offer will get through the official Australian approval process.
I wouldn’t choose to buy shares today because of that uncertainty, but it’s pleasing for shareholders.
