Santos stock slumps as $18.7 billion ADNOC-led deal collapses

Core Viewpoint - Santos' shares fell nearly 14% after the Abu Dhabi National Oil Company's consortium canceled its $18.7 billion bid due to inability to agree on commercial terms, although analysts expressed concern over the third failed takeover attempt in seven years, investors remained optimistic about upcoming production from two projects in Australia and Alaska [1][6]. Group 1: Bid Cancellation - The consortium led by Abu Dhabi National Oil Company scrapped its bid for Santos, stating that commercial terms could not be agreed upon [1]. - Santos had expected the consortium to cover capital gains tax payments due on its assets in Papua New Guinea, which the consortium objected to [2][3]. - Santos had proposed to finalize a deal at $5.626 per share, down from the original offer of $5.76 per share made in June [3][4]. Group 2: Market Reaction - Santos shares dropped to A$6.61, marking their lowest price since June 10, and were on track for their worst day in over five years [5]. - The decline in share price returned Santos to trading levels prior to the bid announcement in June, attributed to the failed deal and the removal of the takeover premium [6]. - Some investors expressed satisfaction with the development, believing the company should focus on managing its core assets and capitalizing on upcoming projects [6][7]. Group 3: Future Prospects - Analysts and investors are optimistic about Santos' Barossa gas project in Australia and the Pikka oil project in Alaska, which are expected to start production soon [1][7]. - Portfolio managers suggest that Santos should not break up its core assets as it enters a favorable phase for production and cash flow generation [7].