The Santos Ltd (ASX: STO) share price is down more than 11% after the takeover offer was withdrawn.
Santos is one of the largest energy businesses listed on the ASX.
XRG withdraws offer for Santos shares
The ASX energy share had been subject to a non-binding, indicative proposal announced on 16 June 2025 from a consortium led by XRG, a subsidiary of Abu Dhabi National Oil Company, as well as Abu Dhabi Development Holding Company and Carlyle, to buy all of Santos’ shares.
On 25 August 2025, Santos agreed to a second extension of the process and exclusivity deed to enable the deal to be finalised and obtain necessary approvals.
XRG said it “had not found anything in due diligence that would lead it to withdraw its indicative proposal.”
On 15 September 2025, the Santos board told the XRG Consortium that it expected to enter into a takeover agreement at the agreed offer price of US$5.626 if a binding proposal was received.
In response, the XRG Consortium notified the Santos board yesterday evening that it was withdrawing and not proceeding with a takeover.
Santos also said that XRG Consortium confirmed that it “maintains a positive view of the Santos business and has respect for the management team”.
Santos’ board had expressed concerns about deals in agreeing the takeover and also concerns that XRG would not agree to acceptable terms that protected the value of the potential deal for Santos share owners, regarding the likely extended timeframe to completion and the regulatory risk associated with the transaction.
Santos also pointed out that XRG would not agree to the obligation of the XRG Consortium to secure regulatory approvals and the provision of a reasonable commitment to the development and supply of domestic gas.
What are the positives?
Aside from the company remaining on the ASX, available for Aussies to invest in it, Santos pointed out a few positives.
It said it continues to execute on its strategy, with the base business generating “strong, stable cashflows” with a low-cost operating model. Plus, its two major development projects, Barossa and Pikka phase 1 are “well advanced”, positioning the company for a 30% increase in production by 2027 and grow free cash flow.
Time will tell what happens next with the Santos share price now there isn’t an expectation of a takeover boosting the valuation. But, oil and gas businesses are certainly not at the top of my wishlist for buying Santos shares. There are plenty of other ASX shares I’d buy first.
