Santos Shares Fall 12% After XRG Consortium Pulls $18.7 Billion Bid

By David Winning

SYDNEY--Santos's share price falls sharply after a consortium led by Abu Dhabi National Oil Co. unit XRG abandoned its $18.7 billion takeover offer, prompting analysts to debate what's next for Australia's second-largest energy company.

Santos had said it was ready to support a bid worth US$5.626/share, equivalent to around 8.42 Australian dollars a share. That would have represented a significant premium to Santos's stock price of A$6.21/share just before the consortium's bid became known.

Santos's shares were down 12% to A$6.70 soon after Australia's share market opened on Thursday. Confirming the deal is off, Santos highlighted disagreements with the consortium over terms given the length of time it could take to complete a deal.

Jarden moved quickly to downgrade Santos to underperform, from outperform, and strip out any bid premium from its target price.

"We expect Santos shareholders to be bruised by the sudden withdrawal of the proposed takeover offer and ask the board and management questions regarding negotiation tactics over the past few weeks," said Nik Burns, an analyst at Jarden.

Citi said the consortium's decision to walk away raises fresh questions around Santos's strategic pathway after three failed approaches since 2018.

"Investors may increasingly question whether Santos can attract a different counterpart or if portfolio rationalization becomes a possible next step, particularly in the context of the Australian domestic market," analyst Tom Wallington said.

Santos, in a regulatory filing on Thursday, attempted to put a positive spin on the deal's collapse, including by pointing to a pathway to an around 30% rise in oil and natural gas production by 2027.

Santos is preparing to bring online the Barossa natural-gas project offshore Australia. It also expects to start up the Pikka Phase 1 oil project in Alaska next year.

"As these projects come online, Santos's capacity to generate free cash flow will materially strengthen, supporting greater returns to shareholders under our capital allocation framework," the Australian company said.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

September 17, 2025 20:24 ET (00:24 GMT)