Abu Dhabi’s XRG Walks Away From $19 Billion Santos Takeover

Core Viewpoint - Abu Dhabi National Oil Co. (Adnoc) has abandoned its $19 billion takeover bid for Australian natural gas producer Santos Ltd. due to disagreements over key terms, marking a significant retreat in its international expansion efforts [1][2][3]. Company Developments - The decision by Adnoc's XRG unit to withdraw from the Santos bid was influenced by a "combination of factors," primarily commercial disagreements regarding valuation and tax implications [2][3]. - XRG, launched to invest Abu Dhabi's capital in international markets, aimed to diversify the emirate's portfolio away from crude oil, but the failure to acquire Santos may hinder its M&A ambitions [3][12]. - Santos had previously received a proposal of $5.76 per share, which represented a 28% premium over its stock price at the time, but investor skepticism about the consortium's ability to finalize the deal was evident as shares remained below the offer price [4][5]. Market Reactions - Following the announcement of the failed bid, Santos' American depositary receipts fell by as much as 9.5% to $4.69, raising questions about the company's valuation and potential undisclosed issues [6]. Regulatory and Competitive Landscape - Adnoc's pursuit of Santos was not the first attempt, as Santos' CEO has previously rejected multiple offers from other companies, indicating a strong commitment to increasing output by 50% by the end of the decade [8][10]. - There has been opposition in Australia against foreign acquisitions, with labor unions urging the government to keep Santos under local ownership [10]. Future Outlook - Despite the setback with Santos, Adnoc and XRG remain committed to pursuing M&A opportunities, with plans to invest in gas-producing assets in the US and energy services for data centers [12][13].