Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The XRG-led consortium’s bid to acquire 100% of Santos, a leading Australian oil and gas producer, has entered its next phase. Both parties have now entered into a due diligence process, formalised through what is known as a Process Deed, during which the XRG will get exclusive access to the company’s information. A statement to this effect was issued by Santos Limited on Friday.
The consortium is led by XRG, a subsidiary of the Abu Dhabi National Oil Company (ADNOC), along with Abu Dhabi Development Holding Company (ADX), a sovereign wealth fund of Abu Dhabi, and US-based investment firm Carlyle.
On June 13, the XRG consortium submitted a non-binding, indicative proposal to acquire all outstanding Santos shares at $5.76 per share, valuing the company at approximately $18.72 billion. The offer represented a 28% premium to Santos’ closing share price at the time.
According to the statement, the Process Deed will allow the parties to negotiate, in parallel with the due diligence process, a binding scheme implementation deed (SID).
“The XRG consortium has been granted exclusive due diligence access for a period of six weeks (Exclusivity Period) from June 27,” the statement said.
During this six-week period, the XRG consortium is allowed to review confidential financial, operational, legal, and strategic information about Santos in order to assess the proposed acquisition.
However, Santos statement added: “A fiduciary exception applies, enabling the Santos Board to deal with potentially superior proposals from competing acquirers for four weeks from June 27.”
The XRG consortium has also entered into a confidentiality agreement with Santos.
Santos clarified that shareholders are not required to take any action at this stage. The company also noted that there is no certainty the consortium will proceed to a binding SID or that a transaction will ultimately take place. It pledged to continue keeping shareholders informed of material developments.
In a statement issued at the time of the proposal, the XRG consortium said it aims to build on Santos’ strong legacy as a trusted and reliable energy producer, while unlocking additional gas supply for Santos’ customers and enhancing domestic and international energy security.
“The proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business,” the statement said.
JP Morgan is acting as financial adviser to the XRG consortium, while Linklaters and Allens are serving as legal advisers.
On the Santos side, Goldman Sachs and JB North & Co are acting as financial advisers, with Rothschild & Co serving as independent board adviser and Herbert Smith Freehills Kramer as legal counsel.
