ADNOC’s consortium cites commercial risks and valuation issues; Santos share faces renewed investor pressure. Abu Dhabi National Oil Company (ADNOC) has withdrawn its $36.4 billion takeover bid for Santos, ending weeks of speculation and becoming the third failed attempt in recent years to acquire Australia’s second-largest oil and gas producer. The move, announced just two days before a deadline to finalize terms, triggered questions about Santos’ valuation and its long-term growth strategy.
ADNOC’s investment arm, XRG, which led the bidding consortium alongside another Abu Dhabi government entity and Carlyle Group, said due diligence had uncovered factors that materially reduced its assessment of Santos’ worth. The consortium said it remained positive about Santos’ overall business but could not proceed under the proposed terms.
Santos Rejects Risk-Sharing Proposals
Santos shares confirmed that the consortium had withdrawn its indicative bid and noted that it had raised concerns over delays and the lack of acceptable protections for shareholder value. The company said negotiations broke down partly because the suitors refused to agree on an “appropriate allocation of risk,” particularly regarding regulatory approvals and commitments to Australia’s domestic gas supply.
The indicative offer, originally pitched at $US5.76 per share and later trimmed to $US5.626 ($8.46) after an interim dividend, was already under pressure. Santos shares, which last traded at $7.65, have gained 13 percent this year despite takeover uncertainty.
Industry analysts suggest that additional factors may have spooked the bidders, including a potential capital gains tax liability in Papua New Guinea and reports of a methane leak at Santos’ Darwin LNG project.
Another Failed Courtship
The collapse marks the latest in a series of unsuccessful takeover attempts. Previous approaches from Harbour Energy in 2017–2018 and merger talks with Woodside Energy in 2023 also failed to materialize. Analysts argue that these repeated breakdowns highlight persistent challenges in assessing Santos’ value and negotiating terms acceptable to all parties.
Energy analyst Saul Kavonic said bidders often walk away after “looking under the hood” of Santos’ assets. He added that while ADNOC’s exit raises questions about valuation, the company did not signal broader concerns about Australia’s investment climate, noting the UAE’s confidence in ongoing trade ties.
Focus Shifts Back to Santos’ Growth Projects
The end of the bid increases scrutiny on Santos’ leadership, particularly CEO Kevin Gallagher, who has faced calls from investors to deliver stronger returns. Chairman Keith Spence defended the company’s strategy, pointing to upcoming projects such as the Barossa gas development in the Timor Sea and the Pikka oil project in Alaska, both expected to boost future earnings.
While the consortium emphasized that it was prepared to commit to long-term Australian energy production and regional energy security, Santos shares must now rely on its existing growth pipeline to reassure investors. With its global portfolio spanning Australia, Papua New Guinea, and Alaska, the company insists it remains well-positioned to deliver long-term value.
At the same time, questions linger about whether future suitors will encounter similar obstacles—or whether Santos will need to pursue alternative strategies to unlock shareholder confidence.
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