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Santos Limited said it has entered into a process and exclusivity deed with a consortium led by XRG P.J.S.C. related to its non-binding indicative proposal to acquire 100 percent of the issued shares of Santos for $5.76 (AUD 8.89) per share in cash.

XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC), is the lead investor of a consortium that includes Abu Dhabi Development Holding Company and Carlyle.

The process deed governs the basis upon which the XRG consortium “will have the opportunity to undertake due diligence and provides for the parties to negotiate in good faith, in parallel with the due diligence, a binding scheme implementation deed to implement the potential transaction,” Santos said in a news release.

The consortium has been granted exclusive due diligence access for a period of six weeks from June 27. The exclusivity provisions include customary “no shop”, “no talk”, “no due diligence” and “notification” obligations that apply during the exclusivity period, Santos said.

A fiduciary exception applies enabling the Santos board to deal with other proposals from competing acquirers starting four weeks from June 27, the company said.

The consortium has also agreed to a confidentiality agreement with Santos, the company stated.

“The proposal is for the acquisition of all of the ordinary shares on issue in Santos for a cash offer price of $5.76 per Santos share”, which would be adjusted for dividends paid before a final proposal comes into force, Santos said in an earlier statement. The price had been increased from two confidential offers of $5.04 per share and later $5.42 per share in March, the company noted revealed.

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XRG said in a separate statement that the consortium “aims to build on Santos' strong and longstanding legacy as a trusted and reliable energy producer, unlocking additional gas supply for Santos' customers, and strengthening 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 [liquefied natural gas] business,” the company added.

The consortium has committed to keeping Santos’ headquarters in Adelaide, brand, and operational footprint in Australia and key international operating hubs. It also plans to “work closely with the existing management team to accelerate growth and support local employment and the communities where Santos operates,” XRG said.

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Further, the consortium looks to invest in Santos’ growth and further development of its gas and LNG-focused business “which will provide reliable and affordable energy and low carbon solutions to customers in Australia, the Asia Pacific and beyond”.

The consortium also aims for Santos to remain “a contributor to the transformation of energy systems and continues to make future-facing investments in Santos’ carbon capture and storage projects, low carbon fuels, other decarbonization initiatives and the application of AI to drive efficiency and value across operations,” XRG said.

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