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In June, Santos received a non-binding indicative proposal from the XRG consortium, which includes Abu Dhabi Development Holding Company (ADQ) and US-based investment firm Carlyle.
Last month, Santos further extended the exclusivity period for its proposed takeover.
XRG said in a statement on Wednesday that the consortium will not proceed with a binding offer for Santos.
“While the consortium maintains a positive view of the Santos business, a combination of factors, when considered collectively, have impacted the consortium’s assessment of its indicative offer,” it said.
Following a comprehensive evaluation, and taking into account all commercial factors and the terms of the scheme implementation agreement (SIA) required by the Santos board, the consortium has determined that it will not be proceeding with the proposed transaction.
“While disappointed not to move forward, XRG, and its consortium partners, are responsible, disciplined investors with a clear focus on creating value for our shareholders and driving long-term growth,” the company said.
The consortium was prepared to undertake new long-term commitments to Australian energy production that would deliver “meaningful benefits to domestic gas consumers and enhance regional energy security.”
“As a strategic long-term investor, XRG remains dedicated to pursuing value-accretive opportunities across gas & LNG, chemicals, and energy solutions, and has a rich and deep pipeline of investment opportunities which we will continue to pursue,” the company said.
Santos statement
Santos said in a separate statement that on September 15, its board advised the XRG consortium that Santos expected to enter into an SIA at the agreed offer price of $5.626 if a binding proposal was received from the consortium on acceptable terms on or prior to September 19.
In response, the XRG consortium notified the Santos board Tuesday evening of its decision to withdraw its proposal and not proceed with the transaction.
“The Santos board had expressed its concern to the XRG consortium about delays in agreeing the SIA. The XRG consortium would not agree to acceptable terms which protected the value of the potential transaction for Santos shareholders, having regard to the likely extended timeframe to completion and the regulatory risk associated with the transaction,” the company said.
Furthermore, the XRG consortium would “not agree to an appropriate allocation of risk between the XRG consortium and Santos shareholders under the SIA.”
“This included the obligation of the XRG consortium to secure regulatory approvals and the provision of a reasonable commitment to the development and supply of domestic gas,” the company said.
