Santos Ltd (ASX: STO) shares are catching the eye on Monday morning.
At the time of writing, the ASX 200 energy giant's shares are up 15% to $8.02.
This follows news that it received a takeover proposal after the market close on Friday.
Santos shares jump on takeover offer
According to the release, Santos has received a non-binding indicative proposal from a consortium led by Abu Dhabi National Oil Company (ADNOC), along with Abu Dhabi Development Holding Company (ADQ) and global private equity firm Carlyle.
This group, known as the XRG Consortium, is offering to acquire all outstanding Santos shares for US$5.76 per share (approximately A$8.89) in cash via a scheme of arrangement. This values the company at A$30 billion.
With Santos shares ending last week at $6.96, this offer represents a substantial 28% premium to its last close price, and an even larger premium to its recent trading averages. The releases notes that it is a:
- 30% premium to 1-week volume weighted average price (VWAP)
- 34% premium to 1-month VWAP
- 44% premium to 3-month VWAP
- 39% premium to 6-month VWAP
What does the board think?
The release notes that the Santos board has agreed to grant the XRG Consortium due diligence access to progress the offer further.
The board stated it believes it is in the best interests of shareholders to allow confirmatory due diligence and negotiation of a binding Scheme Implementation Agreement (SIA).
If satisfactory terms can be agreed upon, the board intends to unanimously recommend the deal. This is in the absence of a superior proposal and subject to the independent expert's report.
The XRG Consortium is requesting a process and exclusivity deed to proceed — which would lock in exclusivity while due diligence is conducted.
Not the first offer
This latest bid follows two earlier confidential offers from the consortium in March 2025.
The first was valued at A$8.00 per share and the second was worth A$8.60 per share.
This new A$8.89 proposal is the consortium's highest yet and has been described as its "final non-binding indicative offer."
However, investors should note that the deal still remains subject to a number of conditions. This includes regulatory approvals from authorities in Australia, the U.S., and Papua New Guinea.
Santos also warned that there's no certainty the proposal will result in a transaction. As a result, it has told shareholders that they do not need to take any action in relation to the indicative proposal at this stage.
Following today's gain, Santos shares are now up 9% over the past 12 months.
