2nd bid in two years for Santos collapses
The collapse of the nearly $30 billion bid marks a dramatic reversal for Santos and its suitors. Only weeks ago, Santos executives were signalling that a deal was close, granting the XRG-led consortium a four-week extension to hammer out final terms.
But behind closed doors, the sticking points proved too much. The consortium refused to shoulder sufficient regulatory risk or commit to the level of domestic gas supply the Santos board insisted on, and without those protections, Santos declared the offer dead.
The share price of Santos on the ASX fell 13% to $6.74 on the news.
The move has raised fresh questions about Santos’ future. This is now the second time in as many years that a major suitor has walked away, after the collapse of a proposed merger with Woodside in 2024.
Analysts say the repeated failures are unusual and could spook investors. MST Financial’s Saul Kavonic noted that two abandoned deals in quick succession “raises red flags” and could indicate deeper structural or cultural issues inside Santos.
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For the XRG consortium, the retreat is being spun as pragmatic rather than pessimistic. It stressed that it still holds a “positive view of the Santos business” but argued that the combination of regulatory hurdles, risk allocation, and shareholder demands made the price unjustifiable.
The disappointment is obvious, but the message is clear: without more flexible terms, Santos may continue to scare away suitors.
Meanwhile, investors are left to wonder if Santos can steady its own course. With core assets spread across South Australia’s Cooper Basin, Queensland’s LNG hub at Gladstone, Western Australia’s offshore fields, and PNG projects, the company is still a major player in regional energy.
But the shadow of two failed mega-deals now looms large, and the pressure on Santos’ leadership to deliver growth independently has only intensified.
This news updates our blg from 16 June 2025 …
Santos Backs $30 Billion Takeover from Middle East Oil Consortium, Raising Eyebrows in Canberra and Adelaide
16 June 2025 – In a bold move with sweeping geopolitical and domestic implications, Abu Dhabi’s national oil company, through its investment arm XRG and Abu Dhabi’s sovereign wealth fund ADQ, have teamed up with US private equity titan Carlyle to launch a nearly $30 billion takeover bid for Santos — Australia’s second-largest gas producer and South Australia’s corporate crown jewel.
The proposed acquisition, which offers shareholders $8.89 per share — a 28 per cent premium on the company’s most recent closing price — has sent Santos stock soaring 12.3 per cent. But it also triggered immediate political and regulatory scrutiny.
Treasurer Jim Chalmers confirmed he would seek advice from the Foreign Investment Review Board (FIRB) before making any decision, flagging that this is “potentially a very large transaction” with “national interest considerations at play.”
Santos, which traces its roots back to 1954 as South Australia and Northern Territory Oil Search, has evolved into a major ASX-listed multinational with strategic assets across Australia and Papua New Guinea, including the Cooper Basin, GLNG in Gladstone, the Narrabri Gas Project in NSW, and offshore projects in Western Australia. The company plays a critical role in domestic energy supply and export revenue, making the acquisition anything but a routine business deal.
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South Australia Reacts
The South Australian government — acutely aware of Santos’s economic and symbolic significance to the state — has already sounded a cautionary note. Premier Peter Malinauskas warned the state will not hesitate to intervene if the transaction is “not in the interests of South Australians.”
With thousands of jobs, billions in state revenue, and control of vital energy infrastructure on the line, the Premier’s office is monitoring developments closely.
“There are serious questions to be asked about sovereign ownership of such critical assets,” said a state government spokesperson, noting that Abu Dhabi’s majority stake via a state-owned enterprise may have long-term implications for energy pricing, local employment, and investment decisions.
What’s on the Table
While the takeover remains non-binding and subject to multiple layers of scrutiny — including from FIRB, ASIC, the National Offshore Petroleum Titles Administrator (NOPTA), and overseas regulators in PNG and the US — Santos’s board has signalled it intends to unanimously recommend the offer to shareholders in the absence of a superior bid.
The board described the deal as “a compelling opportunity” to deliver value while potentially opening up new avenues for growth.
The consortium, for its part, is saying all the right things — pledging to retain Santos’s existing management, accelerate project development, and support local jobs and communities. But the optics of a foreign, state-owned oil giant assuming control of key Australian energy infrastructure has triggered anxiety in security and policy circles.
“This isn’t just about dollars and cents,” noted a Canberra-based analyst. “It’s about how comfortable we are with foreign governments controlling core elements of our energy security, especially in a volatile global market.”
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Political Timing and Strategic Implications
The bid lands on Treasurer Chalmers’ desk at a particularly fraught moment. With tensions escalating in global energy markets, the Albanese government has been walking a tightrope between encouraging foreign investment and safeguarding national assets.
Australia’s gas sector has come under increased scrutiny amid climate concerns and looming shortages on the east coast.
The irony is hard to miss: just as the Albanese government champions a renewables-led energy transition, it now must consider whether to approve the takeover of a key fossil fuel producer by one of the world’s most powerful oil states.
Will a foreign fracking company act in Australia’s interest?
Despite the consortium’s assurances that it will act in the national interest, the proposed takeover has sparked outrage among Indigenous communities and farming groups who have long opposed Santos’s controversial gas expansion projects.
In the Northern Territory, Traditional Owners have fiercely resisted the company’s fracking activities in the Beetaloo Basin, citing threats to sacred sites and groundwater.
Farmers in Narrabri, New South Wales, have waged years-long campaigns against Santos’s coal seam gas plans, fearing contamination of the Great Artesian Basin and damage to prime agricultural land.
For these communities, the prospect of a foreign state-owned oil giant — backed by Wall Street capital — taking the reins of a company already accused of ignoring local voices, raises alarm bells about the erosion of land rights, environmental protections, and democratic accountability in the name of ‘national interest.’
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What’s Next?
Expect weeks — if not months — of intense lobbying, political wrangling, and shareholder speculation. Analysts suggest rival bidders, perhaps from Asia or another private equity group, could emerge. The question is whether any of them can match the cash-rich, geopolitically strategic allure of a Middle Eastern oil sovereign fund.
Meanwhile, for Santos employees, gas consumers, and state governments invested in the outcome, the proposed sale marks the beginning of a new chapter — one that will test Australia’s investment rules, energy independence, and willingness to hand the keys of a critical industry to foreign hands.
Stay tuned. This one’s just heating up.
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